A poor third quarter and continuing management problems at networking equipment company GTI Corp have raised the possibility of the company being sold off, and a specialist investment bank has been appointed to help the San Diego-based company find a credible path out of the doldrums. GTI is currently 57% owned by Telemetrix Plc, the High Wycombe, UK-based semiconductor manufacturer and telecommunications test equipment supplier, whose profit and loss account has been carrying the can for GTI over a number of troubled years. In a brief but carefully worded statement, Telemetrix said that US investment bankers Cowen & Co had been appointed to advise GTI on its strategic alternatives, including a possible sale. But Tim Curtis, chief executive of Telemetrix, was at pains to point out that the move had been initiated by a special committee of GTI’s directors, and has not involved the Telemetrix board directly. Although GTI is a majority owned subsidiary of Telemetrix, the long and meandering path to its acquisition has resulted in precious little management control of the US outfit, a fact which makes the subsidiary’s poor results ever more painful. GTI represents around 40% of the Telemetrix group in revenue terms, but its losses ran to $21m in 1996 and continuing losses through 1997, combined with falling revenues, have forced GTI’s hand. Telemetrix has bankrolled the company in the past, but further funds sacrificed to the US outfit would be difficult to sell to the group’s long suffering UK share holders. TelemetrixÆs operations in the UK are highly profitable but GTI’s problems and the disposal of its loss making Network Access Card business last year knocked a huge hole in the 1996 group accounts. With increasing consolidation amongst GTI’s customers in the networking industry, the company has seen its customer base dwindle. And while its closest competitors have joined forces in the face of adversity, GTI has been left out in the cold. Its Nasdaq listed stock is now trading below $4 having reached a high of $41 a few years ago. No timetable for a decision on the companyÆs future would be admitted to but GTI’s fourth quarter results are due out at the end of this month.
