The New York Times


NUMBER ONE            WEDNESDAY JULY 15, 1964            PRICE SIXPENCE


Control Data Australia Memories compiled by Brian Membrey

Head Office

Control Data Corporation chip of former self

Milwaukee Sentinel, 30 January, 1990

"Bloomington, Minn. — Associated Press — Once self-proclaimed the most innovative company in the world, Control Data Corp. has entered the 1990s as a much smaller business scarred by $1.4 billion in losses in the last five years.

The loss of $680.4 million for 1989, reported Tuesday was the worst performance In the computer company's 32-year history. It eclipsed the 1985 loss of $367.5 million, the previous worst batch of red Ink.

In fact, In the 1980s. Control Data lost twice as much money as it earned: $1.43 billion vs. $684.1 million.

To fix things, management has lopped off huge subsidiaries and parted ways with founder William C. Norris. The moves will reduce sales to an estimated $2 billion in 1990 compared with $5 billion in 1984.

"They've cut off the patient's legs, arms and nose," said Peter Zidek, a supercomputer consultant who once worked for Control Data "There's not much left to operate on.

Launched as a maker of mainframe scientific computers. Control Data diversified quickly into financial services by leasing industrial equipment and selling insurance.

In 1977, for example. Control Data made about $10.6 million on insurance sales, six times what the entire company earned in 1988.

The company's far-flung enterprises also came to include windmill farms, factories built In ghettos, incubation centers for small businesses and a training program that encouraged city dwellers to take up farming.

'We were in too many businesses said Control Data spokesman Frank Ryan. "Management's focus can only go so far."

The remedy, carried out mostly by Norris' successor, Robert Price, has been to sell more than 20 businesses or product lines since 1984.

The sell-offs in 1989 Included a disk drive subsidiary that accounted for a third of Control Data's $3 62 billion revenue in 1988 and the shutdown of a supercomputer subsidiary. ETA Systems.

The latter ion more than $230 million in Iis six-year life and cost $335 million to close.

Another major downsizing occurred in 1986 and 1987, when Control Data cut all ties to Commercial Credit, the financial services subsidiary that, throughout much or the 1970s, generated more profit than the company's computer business.

The changes have coincided with a 72% reduction in employment at Control Data - from a high of 60.600 in 1981 to about 17,000 at the end of 1989.

Later this year. 400 more jobs will be cut from Control Data when the company sells its VTC chip-making subsidiary.

Mostly to cover anticipated losses at VTC, the company wrote oft about $214.7 million in the fourth quarter. resulting in a net loss of $196.4 million or $4.63 a share.

Newly appointed President Lawrence Perlman has said VTC should be the last write-off in Control Data's  six-year effort to transform itself into a computer-based services company.

He is projecting a profit of up to $63 million this year.

Gary Smaby, a computer Industry analyst In Minneapolis, said Perlman must meet that projection if Control Data is to be considered a legitimate turnaround stock.

What's left of Control Data Includes an installed computer base of 1,500 mainframes and 1,500 work stations. Maintaining the base is a huge business, but the company is not likely to add greatly to its own hardware, Snaby said.