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  1. Technology
March 13, 1988


By CBR Staff Writer

Wang Laboratories Inc shares took a nasty tumble on Wall Street Thursday after the company said that fiscal third quarter turnover is likely to be up only 4% to 6% rather than the 10% to 12% it had been looking for, and the announcement led to new worries about the prospects for computer companies in general in the wake of Meltdown Monday. The announcement was enough to reduce the value of Wang by a full 21.3% as the company’s shares slumped $3.50 to hit bottom at $12.875. Wang chose to blame the deteriorating profit and turnover outlook on customer uncertainty about the economy, and president Fred Wang said that at the start of the calendar year we saw a slowing of the closing of new business – customers asking to defer orders for a few months. Although some of the problem is seen as specific to Wang rather than general to the computer market, coupled with the suggestions of a slowing of growth at DEC, the news from Wang has turned computer analysts distinctly more bearish, and fears are growing that the mid-range at least, if not the entire computer industry, is heading into a slowdown. In its efforts to make the VS computer rather than word processors the core of its business, Wang is particularly vulnerable to any softness in the mid-range, and faces the problem that the whole market is moving away from small proprietary business systems. Some users are opting for micros networked to a big server to do the job that small business mainframes formerly did, others are rejecting proprietary operating systems for what is increasingly being seen as an industry standard, Unix – Unisys has built a Unix business from zero to $500m a year since November 1984, and that business has to have been largely at the expense of machines like the IBM System 36, Wang VS and minis from the likes of Data General. Fred Wang remains optimistic however, saying that the company still expects to meet its fiscal year year targets of profitability in each quarter and a 5% after tax profit for the full year to July.

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