Making it even less likely that any third party will want to get involved with the division on attractive terms, and further damaging its already dismal performance, union leaders at the personal computer factory Ing C Olivetti & Co SpA yesterday called a one-hour strike at the factory at Scarmagno yesterday over their concern at prospect for jobs at the company; the plant employs 1,500, and in the wake of the departure of Carlo de Benedetti, Olivetti says it has decided to speed up the reduction of its presence in the hardware sector, widely taken to mean it plans to exit the personal computer sector. Hewlett-Packard Co was last year named as a possible partner for the personal computer business, but the demonstration that the employees are prepared to stop work at the slightest provocation will likely cause it to think again.
The markets yesterday were overjoyed to see the back of de Benedetti, and after tumbling for two days, the share price did a smart about-turn and jumped more than 11% yesterday, more than reversing the falls on Monday and Tuesday. The jump was so sharp that trading in Milan was suspended for 45 minutes. Olivetti accompanied news of de Benedetti’s departure with a woeful set of first half figures showing a pre-tax loss of $290m after a full-year consolidated loss of $1,055m in 1995. The operati ng loss was $53m in the first half, and the net loss was $97.6m. Consolidated net sales for the half fell 10.8% to $2,788m. Net debt at the end of the first half was $832m, disconcertingly higher than the $493m at at December 31 1995. The board also approved a $132m provision against possible charges stemming from divestments and restructuring deriving from the plan to scale back further on hardware – the systems business, 53% of the total, is now primarily systems integration and services wit h very little original hardware; hardware is now largely confined to personal computers, typewriters, facsimile machines and copiers. De Benedetti said he was resigning as chairman and board member in line with a declaration he made linked to the su ccessful outcome of the early 1996 rights issue to raise $1,500m. The board named board member Antonio Tesone as the new chairman and Francesco Caio remains managing director after his July appointment; he is now expected to be the one to say Ciao t o personal computers. De Benedetti becomes honorary chairman. Caio is a telecommunications engineer who has worked closely with Olivetti’s Omnitel Pronto Italia SpA partners, including AirTouch Communications Corp Bell Atlantic Corp, Cellular Communications Inc, Mannesmann AG and Telia AB. Omnitel saw better-than-expected subscriber growth, but won’t turn a profit until 1998.
By Tim Palmer
