Struggling computer maker Control Data, which warned employees recently that it was losing "a lot of money," proved it Monday when it reported a worse-than-expected quarterly loss of $255.6 million.
Minneapolis-based Control Data said about three-fifths of the record loss stemmed from one-time restructuring costs and other special charges. That includes plans for dismantling its $200-million-a-year business products group, announced Monday along with financial results.
But Control Data's operating loss was a hefty $83.3 million, worse than some analysts had recently been forecasting for the entire year.
Paul Karos, an analyst with Piper, Jaffray & Hopwood in Minneapolis, said he had expected an operating loss for the period. But Karos said the worst should now be behind Control Data.
The company, however, said further cutbacks are under consideration that could result in extraordinary charges in the current quarter as well.
"The actions we are taking and will be taking in restructuring and narrowing the scope of our business operations, while adversely affecting our short-term results, should significantly enhance our future profitability," said Robert M. Price, president and chief operating officer.
The company also said discussions with lenders to restructure its financing agreements are "proceeding satisfactorily." The company fell out of compliance with some terms of its loans when it revised downward its first-half financial results.
The company's losses, on flat revenue of $1.2 billion, came almost entirely in its division that makes large-scale disk drives and other computer parts and accessories. It blamed the losses on poor demand, excess capacity and weak prices for such products. Control Data also makes large, high-speed computers and has a financial-services division.
Control Data said it will "divest" the business products group. A spokesman said that means it will try to sell the unit, which employs 2,000 in Wales and Nebraska and makes so-called floppy disks and other computer memory storage devices. The firm said it will shut the unit if nobody buys it.
It is the latest and one of the largest cost-cutting steps that Control Data has announced during the year as its financial performance repeatedly has fallen short of its own expectations. Despite the wider-than-expected loss, the retrenchment was well received on the New York Stock Exchange, where the price of the company's shares closed up 87.5 cents at $18.25.
"Everybody expects that, with business products behind them, it may mean better profits ahead," analyst Karos said.
Last year, the company reported a third-quarter loss of $54.5 million.