8,500 Jobs To Go As AT&T Pulls Plug On PC Business
Sep. 20, 1995
DAYTON, Ohio (AP) _ AT&T Corp. pulled the plug on its personal-computer manufacturing business Wednesday, marking the end of its struggle for a share of a fast-changing market.
The telecommunications company was too cumbersome, an industry analyst said.
``I think AT&T was too large, too bureaucratic and too slow-moving to make the kind of strategic changes that the industry has demanded,'' said Richard Buchanan, president of the New Hampshire-based Buchanan Group.
``Speed is everything these days. If you cannot change at the speed of light or at least as fast as your top competitors, you're dead.''
AT&T said the jobs of 8,500 of the 42,800 workers at AT&T Global Information Solutions worldwide will be eliminated, most of them by the end of the year. The move follows two straight quarters of operating losses.
The cuts will include 1,000 of the 4,300 jobs at the company's Dayton headquarters and all 900 jobs at a PC manufacturing plant in Liberty, S.C. Included will be the jobs of 1,300 contract employees.
``I feel kind of sad. It's a tough thing to go through,'' said AT&T GIS contractor Dick O'Neil, 53, a former employee.
GIS is the former NCR Corp., which AT&T acquired in 1991 for $7.4 billion in a protracted, hostile battle. The unit's work force since has declined from 56,000.
Like other manufacturers who specialized in big computers, GIS has been hurt by the shift in demand from large mainframe computers to networks of PCs and workstations.
Buchanan said a company has trouble finding a niche in the market unless it has a brand name consumers associate with computers.
He said AT&T developed a good computer that had an answering machine and the ability to set up teleconferences.
``Unfortunately, that is not the big draw for top-line computers,'' he said. ``The growth in the market now is for home PCs.''
GIS will continue to make large computers, automated teller machines and grocery store bar-code scanners. It will use an outside company to supply PCs for corporate customers. The unit will focus on retailing, financial services and communications.
``I definitely think that some trimming was necessary,'' said GIS worker James McCutcheon, 22, of Dayton. ``Obviously, we are losing money. Obviously, some focus needs to happen in order to attempt to return to profitability.''
GIS lost $189 million in the second quarter, its largest quarterly loss since becoming part of AT&T. In the first quarter, the unit lost $143 million.
AT&T Chairman Robert Allen said the company was not happy with the results of GIS but is committed to the unit.
``Has it been the success we anticipated? Absolutely not,'' he said. ``Is it a lost enterprise. Absolutely not.''
GIS Chairman Lars Nyberg said the unit was competing with PC companies that have smaller administrative structures and lower expenses. He said the restructuring should allow the company to break even in 1996.
Employees heard the layoff numbers in a meeting with executives Wednesday morning. They were awaiting individual meetings with managers to learn which jobs were being eliminated.
``I think people are very anxious,'' said worker David Rose, 50, of suburban Kettering. ``It's a very trying time. ... It eats at you.''
NCR was founded as National Cash Register by John Henry Patterson in 1884. Often referred to as ``The Cash,'' it nearly cornered the market on cash registers, creating thousands of jobs.
As electronic machines replaced the electro-mechanical registers in the early 1970s, NCR began cutting back payrolls. But the company stepped up production of electronic cash registers and leaned more heavily on its business computer line.