Tektronix Inc has started fiscal 1999 off on the wrong foot, posting a first-quarter net loss of $4.7m and announcing restructuring that includes the layoffs of 10% of its overall workforce and the spin-off of one of its businesses. Revenues for the Wilsonville, Oregon company, which dabbles in network computers, color printing and measurement systems, dipped 12.9% to $419m. The loss is directly attributable to the loss at electronic circuit board maker Merix Corp, in which it holds a 27% interest and accounts for on an equity basis, which impacted Tektronix’ bottom line to the tune of $0.09 per share. Net of that shortfall, the company says, it would have posted earnings at the break-even level. Still, Wall Street was expecting a profit of $0.08 per share. Tektronix blames the shortfall on the impact of Asia and as well as what it describes as a significant decline in sales to the broadcast market as it transitions to digital. Across its businesses, color printer sales for the period were flat with the year-ago period at $155.4m, while the measurement business saw sales decline 9.3% to $206.5m and the video and networking division plunged 41.7% to $57.1m. As a result of the weak performance – especially in the video and networking division, which has caused the lion’s share of the company’s problems recently (CI No 3,441) the company will implement the cost cutting measures. It will exit the network displays business altogether by spinning off a majority interest in the business to the unit’s management team. Tektronix will retain a minority interest in the unit and continue to provide it with manufacturing services for a limited time. It will also pink-slip roughly 860 of its 8,600-person workforce, as well as constrain capital spending, shut plant operations on a temporary basis when possible, and place stringent controls on all discretionary spending. The company said the actions will result in a yet-to-be-determined charge in the second quarter. Looking ahead, Tektronix says it will focus on the areas that show the most potential for significant long-term growth, such as business color printing, communications test and video networking and storage.
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