Interesting developments with implications for all IS businesses ...
Safeguard Scientifics Announces Restructuring Plans For CompuCom Systems
WAYNE, Pa., Nov. 5 /PRNewswire/ -- Safeguard Scientifics, Inc. (www.safeguard.com), the New York Stock Exchange-listed (NYSE: SFE) strategic information systems company, announced that CompuCom Systems, Inc. (Nasdaq: CMPC), its majority-owned subsidiary, will record a restructuring charge in the fourth quarter 1998 of approximately $20-$25 million as part of a strategic shift to a virtual office model. As a result of these charges, CompuCom will report a net loss for the fourth quarter 1998.
"This move to a virtual office is a major change to our business model, which we believe will enhance value to both our customers and shareholders. However, our customer relationships should remain unchanged," said Ed Anderson, president and CEO of CompuCom. "We are retaining local presence in every market we are in today, but we are shedding the bricks and mortar. Our sales reps and engineers in the field have had facilities for remote communication for some time," Mr. Anderson added.
The restructuring charge primarily consists of costs associated with closing branch facilities and disposing of related fixed assets as well as employee severance and benefits from a reduction of less than 10% of CompuCom's workforce. These reductions are associated with the strategy shift and an organization-wide tightening of expense.
"CompuCom's product business has been under pressure for several quarters, and this move is aimed at creating an economic model more capable of growth which should be more attractive to value-conscious buyers and the direct initiatives of its suppliers. CompuCom is targeting a reduction in its product cost structure of approximately 1.25%-1.5% of sales which should benefit both CompuCom and Safeguard going forward," said Michael Miles, senior vice president and chief financial officer of Safeguard.
Commenting on the restructuring, Pete Musser, Safeguard's chairman and CEO, said, "The computer reseller business has gone through significant changes, and CompuCom's restructuring plans present an opportunity for the company to improve profitability and to be the leader in changing the way the reseller industry does business."
Safeguard Scientifics, Inc. is a unique partnership of entrepreneurial companies focused on information technology markets. Safeguard has a proven track record of bringing emerging companies to market through rights offerings to Safeguard shareholders. Past Safeguard rights offerings include Novell, Inc., CompuCom Systems, Inc., Cambridge Technology Partners (Massachusetts), Inc., Coherent Communications Systems Corporation (merged with Tellabs, effective 8/3/98), USDATA Corporation, Integrated Systems Consulting Group, Sanchez Computer Associates, Diamond Technology Partners, Inc., ChromaVision Medical Systems, Inc., OAO Technology Solutions, Inc. and DocuCorp International.
CompuCom Systems, Inc., headquartered in Dallas, Texas is a leading provider of network integration services for both large and medium-sized corporate customers worldwide. CompuCom's services include LAN/WAN projects, consulting, asset tracking, network management, help desk, field engineering, configuration, software management, distribution and procurement. CompuCom is accessible via the Internet at www.compucom.com. PCSave, the division of CompuCom which focuses on the sale of PCs and software to consumers and small businesses via the Internet, is accessible at www.pcsave.com.
The press release contains certain forward-looking statements that involve a number of risks and uncertainties. The actual results of the future events described in these statements could differ significantly from what is stated. Among the factors that could cause actual results to differ are: the actual restructuring charge could be different than what is projected; there could be an inability to effect the cost structure due to additional unanticipated costs; the market could not accept the virtual office model; further issues could develop with respect to managing inventory in response to changes in supplier price protection and return programs; certain or all of the other risks and uncertainties set forth in the public reports and statements of the Company and CompuCom could be realized.
SOURCE Safeguard Scientifics, Inc. |
