Micrografx shares slide on restructuring news
The graphics maker lays off at least 74 employees and splits into two major operations: enterprise process management and technical graphics.
Shares fell 56 cents to close at $1.75 at the end of today's abbreviated trading session, a loss of 24.3 percent. The stock had gone as low $1.13 in the morning, setting a new 52-week low.
The restructuring is a drastic attempt to cut costs and realign into separate operating groups. Micrografx today said it laid off at least 74 employees and split into two major operations: enterprise process management and technical graphics.
In a statement, the company warned that "even in light of the cost reductions already initiated, as management has previously stated, if the company were to fail to acquire additional external financing, it could result in severe operational difficulties. Such difficulties could result in an additional reduction in the scope of operations or ultimately in a forced reorganization or bankruptcy."
News of Micrografx's struggles comes as other technology companies--many of them dot-coms--end a tough quarter. More shake-ups are expected, and warnings are fierce, as Amazon.com and Compaq Computer, among others, lose share value following negative analyst reports.
Allen, Texas-based Micrografx plans to take an unnamed restructuring charge, about which it will reveal further details in a mid-August report on fiscal fourth-quarter earnings. The company's 2000 fourth quarter ended Friday.
One goal of the restructuring is to offset weak international sales, Micrografx said in a statement.
Ken Carraher, Micrografx's current vice president of development, will head the enterprise management operation, which will be headquartered in Portland, Ore. The technical graphics operation will reside in Annapolis, Md., to be run temporarily by Micrografx chief executive Doug Richard.
Most of the layoffs will occur at Micrografx's headquarters, cutting the company's U.S. head count from 187 to 113. Most of the changes aim to eliminate duplication due to the split into two separate business units.
Micrografx is best known for its business and technical diagramming software. The company two years ago shifted from consumer to business graphics, but without much success. The company faced stiff competition from Visio, which Microsoft picked up for $1.3 billion last year.