It sounds surprising given the company’s woes in the recent past, but Wang Laboratories Inc will emerge from Chapter 11 next month with one of the strongest balance sheets in the computer industry, Joseph Tucci, president and chief executive reckons. Quoted in the Wall Street Journal, he notes that the improved balance sheet reflects the conversion of $451m of unsecured long-term debt to equity and $60m in new investment so that Wang will emerge with a debt-to-capital ratio of just 8%, well under the 27% average for software companies. It will also have about $200m in cash and marketable securities, equal to 20% of assets and double the average for hardware companies – and will have just $3m in long-term debt, so that the two big losers in the bankruptcy will be an army of now former employees, and the existing shareholders, including the Wang family, who will receive warrants valued at only a few pennies – although Storage Technology Corp demonstrates that even these could be worth real money again in the medium term. The downside is the potential for Wang’s current product line: Tucci believes it’s a winner, but half the $955m turnover expected for the 12 months to October 1994 will come from maintaining old Wang kit, and 20% from new VS and Tempested personal computer sales – by definition, declining markets.
