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August 15, 1988

NORSK DATA RECKONS IT’s IN GOOD COMPANY ON NORWEGIAN LOSSES: IBM IS HURTING TOO

By CBR Staff Writer

Though overseas business grew by 17%, business in Norsk Data A/S’s home market was down 7%, resulting in a mid-term net loss of $17.7m for the Norwegian-based group (see Company Results, below). Speaking at an analyst’s meeting in London yesterday chief executive Rolf Skar said that the Norwegian market for computer systems had been weak, particularly in the public sector, affecting the market’s two main players, Norsk Data and IBM. Both companies have seen sales drop to 1986 levels during a half year in which orders in Norsk’s domestic market have fallen by about 15%. Mr Skar also said that private industry, including the graphic industry, has been cautious regarding major investments. The slowdown in the oil dependent Norwegian market, which now accounts for 42% of the group’s total turnover compared with 53% last year, caused Norsk Data’s margins to fall by 3% to 4%. He said this was because of an increasing emphasis in services and maintenance at the expense of the more profitable computer sales. On the other hand new orders for computer systems increased by over 40% in West Germany, which the company says is due to the acceptance of new CAD/CAM products in April of this year. Sweden, Denmark and Great Britain all reported a satisfactory level of new orders and a good growth in turnover. Wordplex Information Systems Plc, which was acquired in July 1987 (See CI No 716), has been fully integrated into the group and as such is no longer an identifiable body. However the group did admit that the loss-making Australian and American divisions were now gone and that the UK and Spanish operations were making a positive contribution. The problem for Norsk is that though overseas sales grew by 41% in the six months profit margins are not good. As the company does not see an upturn in the Norwegian market this year or next it is important that the group cuts costs. The company says it has implemented cost cutting measures in the first half year which will have full effect for the second half of the year. The number of employees fell by nearly 150 in the last twelve months and Mr Skar expects the numbers to fall by another 100 in the next 12 months. As for predictions for the second half Mr Skar said he could not guarantee that 1988 would be profitable.

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