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March 6, 1988

RAVAGED GIANT: MASSIVE CHARGES FOR 1987 IN VIEW AT MANAGEMENT SCIENCE AMERICA

By CBR Staff Writer

Troubled IBM mainframe applications software giant Management Science America Inc, Atlanta, Georgia, has reorganised its marketing operations, prompting the departure of Dennis Vohs, president of the MSA Advanced Manufacturing unit which specialised in selling the full range of the company’s products to manufacturers. The company will now have a single sales force and set of product development teams to serve all types of customers, instead of splitting off manufacturers for separate treatment. The move was made as a cost-cutting measure in the wake of what is expected to be a massive loss for 1987: the figures are due out in a week or two. MSA admits that it has shed staff during the past year but denies recent US reports that 80 staff have left as part of the cost cutting drive. Vohs is talking to venture capital firms and plans to start a business in a related area, but is not yet saying what, although he has some contractual restrictions which keep him out of direct competition with MSA in the US. Vohs insists that the company broke even this year at the operating level, and that the losses will arise from write-offs, plus the change to new accounting principles anounced in the third quarter of 1987, which will lead to the deferral of $140m of this year’s revenue, along with some costs. Despite protestations that it is a purely paper excercise, the net effect will mean a one-off massive loss. It is unlikely that Wall Street will agree that the result is just a paper disaster, and if MSA hasn’t yet announced lay-offs of the order currently being rumoured around Atlanta, it may well be driven to do so by investors. When pushed on whether or not merging the two groups into one would lead to redundancies Vohs told our sister paper International Businessgram, You’ll have to ask MSA, I don’t speak for them any more.

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