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November 7, 1995

RADIUS, ON THE BRINK, FIRES NEARLY HALF WORKFORCE

By CBR Staff Writer

Casting a dark shadow over Apple Computer Inc’s whole Mac OS licensing programme, Radius Corp is plunging into ever deeper trouble and shows little sign of having a clear strategy to pull the company out of what will otherwise be a fatal dive. It had 430 people left after laying off 90 in September, but more have since gone, and, already down to 320, it is now laying off almost half of those, leaving it with about 170. In part blaming Apple for its woes, it says it will report an operating loss of $25m to $30m in its fourth fiscal quarter to September, with restructuring charges at least equal to that amount on top. Seemingly admitting that the Supermacquisition was an acqusition too far, the company says it will discontinue selling mass market displays and other low value-added products and focus on next generation digital video tools, three-dimensional graphics boards, and rendering acceleration. It will sell only high-resolution monitors and will not sell its 81/110 Power Mac clone so energetically. Radius blamed its woes on Apple, saying the company did not understand the licensing process and was too intent on making money from the hefty licensing fees it charges Radius. Instead it should focus on getting more market share for Apple-related products by charging a nominal fee. It also said it experienced significantly lower revenue from its digital video products, primarily because of significant price erosion on NuBus-based Mac OS systems, and continued gross margin pressure on graphics boards. Apple’s most recent price cuts left Radius machines more expensive than Macs. MacWeek also hears that Radius is exploring a move from its 180,000 square foot base in Sunnyvale, to a smaller facility near San Jose International Airport. Despite its slow start in the clone market, Radius still aims to develop PCI machines for early 1996, the paper hears.

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