Computer hardware and software distributor Merisel Inc. said Wednesday it expects to report a larger fourth-quarter loss than anticipated and plans to cut 400 jobs or about 15% of its work force.
The El Segundo-based company said it expected to report a loss of 15 cents to 20 cents a share, before year-end adjustments and special charges, for the last quarter of 1999.
The analysts' consensus for the current quarter was a loss of 7 cents a share, according to First Call/Thomson Financial.
"Fourth-quarter results were affected by a significant revenue slowdown, attributed to deferred demand associated with Y2K and increases in front-end selling margins implemented by the company during the quarter," the company said.
For almost a year, there's been some worry that the flip of the calendar to 2000 from 1999 would leave computers vulnerable to the so-called millennium bug, which might make it impossible for computers to distinguish the year 2000 from the year 1900.
Merisel said fourth-quarter sales are estimated to be about $1.3 billion, which represents estimated year-over-year sales growth of 7%. The company plans to release final results in February.
Merisel said the restructuring should result in annualized savings of $25 million. It also said it planned to take fourth-quarter restructuring and impairment charges totaling $5 million to $10 million.
"While we have continued to improve margins throughout the quarter, we are not making progress quickly enough, and the added impact of Y2K has contributed to overall results that fall beneath our expectations," said Dwight Steffensen, Merisel chairman and chief executive officer.
Merisel shares closed unchanged at $1.31 Wednesday on Nasdaq. The announcement was made after the market closed.