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January 24, 1989

BIG LOSS, AND NORSK DATA RUSH TO OPEN SYSTEMS, UNIX COSTS 800 JOBS, 19% OF WORKFORCE

By CBR Staff Writer

Norsk Data AS, which has turned in whopping end of year pre-tax losses equivalent to $121.0m, is having to rush into Unix to prevent its business from vanishing as customers refuse to commit to its proprietary Sintran III operating system for new applications. The decision was triggered by contracts lost in Sweden and Norway because Norsk Data’s machines did not conform to open systems operating standards. Consequently, future technological development is to be concentrated in the development of its own Extended Systems Architecture which is applicable to emerging open standards. This will involve integrating proprietary and standard technology in the networking of computer resources and in the manufacture of a powerful new RISC microprocessor. The company blames its disappointing figures both on its tardiness in integrating software with standard base systems and on weakness in the oil industry dependent Norwegian market. In response to its financial difficulties 800 job losses – 19% – are to be announced today in Sweden and in Norway. On top of this, Norsk Data is restructuring its manufacturing base in two main ways. Firstly, the manufacture of its central processing unit for the MD5000 requires the company to make less of the parts themselves, leading to a reduction in manufacturing units. Secondly, most of the module and board production will be subcontracted out, and personal computers will continue to be bought in from Wyse Technology. The company’s research and development will be repositioned to concentrate resources into integrated software systems and applications, with nearly a quarter of job losses coming from the research and development area. Norsk Data, which already belongs to the Open Software Foundation, is going into strategic partnership with leading standard technology providers, such as Microsoft for software, Santa Cruz Operation for Unix, 3Com for networking, and Aldus Corp for desktop publishing. Along with these alliances, the company has set up a 100%-owned subsidiary in Norway called Dolphin Computers AS, which will develop high performance standards-based processors in the 500 MIPS to 1,000 MIPS class, selling them to other companies as well as to its parent company. The rationale behind the creation of this new company is that it is easier to look for partners through a wholly owned subsidiary. Norsk Data views the immediate future in terms of a commitment to markets where the company has a strong user base, for example, the graphic industry, and the computer aided design and manufacturing solutions market. The short-term effect of all these changes is a cost reduction of $55.5m on an annual basis. Norsk is not, however, prepared to promise a return to profits this year.

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