After five years of continuous restructuring, ICL Plc (UK computer unit of Japan’s Fujitsu Ltd) announced it was reorganizing again to try to remedy its 1995 losses. The company took a #152m restructuring hit last year, which, combined with an operating loss of #31m helped push pre-tax losses to #188m, against profits of #28m last time. Revenues were up 17% to #3,100m. The #152m breaks down into #48m to cover the cost of excess buildings, #25m for an inventory write-down and #79m other rationalisation costs, most of which is for redundancies. The plan to get back in the black is five-fold. Firstly, ICL will focus totally on systems and services. To this end, the volume products business, which sells personal computers and iAPX-86 and Unix servers will be set up as a separate joint venture with Fujitsu, with ICL retaining less than 20% of the venture. This will mean ICL will not have to consolidate its losses in the accounts, but will be able to take its share of any profits. The turnover of volume products is around #650m and it made unspecified losses last year. The future effect was apparent in the pro-forma profit and loss account of ICL solely as a systems and services company. It had revenues up 11% at #2,591m and operating profits down 71% at #26m. The third move is to spin out D2D, the contract manufacturing business in due course. ICL will flesh out details of both companies at CeBit this week. Fourthly, ICL intends to build a global software business on the back of TeamWare, the company’s answer to IBM Corp’s Notes. It will be in the form of a partnership with Fujitsu, with joint development, promotion and sales. There are around 500,000 licenses worldwide, with 200,000 of them in Japan, at the moment. Lastly, ICL is establishing an Interactive Services business, focussing on the design, content management and subscription management, and concentrating on the publishing, education and media sectors. The slimmed-down ICL will therefore concentrate on systems integration in the global retail market and European financial market; more general systems integration in commercial and government sectors; multi-vendor services and facilities management in Europe and multi-vendor distribution in the UK. Apart from the charge, the losses were due to pressure on margins from three sources, according to the company. Firstly mainframe profits were down about #30m in the year. Secondly, prices across all the products were down overall. Operating costs were also too high, hence the rationalisation programme. The volume products business felt the pinch most with its personal computers and servers as the market hit trouble late last year. The volume products businesses’s personal computers will still carry Fujitsu-ICL branding for the time being, said Ninian Eadie, group executive director and head of ICL’s technology division. On its own, ICL planned to ship 500,000 personal computers this year, and Fujitsu around 1.5m. Eadie said jointly the two were number nine in European personal computer sales. Net borrowings increased at the year end to #104.2m to #6.4m last time. Todd was not making any predictions for a year’s time. So much could happen before then. Plans have been shelved to even name a date for going public. Fujitsu will not accede to a flotation until it is certain that the shares will be stable at at least the 225 pence each it paid for them back in 1990. ICL is planning a #200m rights issue in June, completely underwritten by Fujitsu. Regarding the other shareholder, Northern Telecom Ltd, Todd said convention would say they wouldn’t participate, and the company is likely to sit on its hands. It is understood to be waiting to get shot of its existing stake when, or if, ICL makes it back to the stock market. However, at the moment it is still considering its position.
