Oracle's NCI trims workforce

NCI lets go of 15 percent of its workforce as it struggles to make it in the small-computing world, sending the sales staff back to Oracle.

Michael Kanellos
Michael Kanellos Staff Writer, CNET News.com
Michael Kanellos is editor at large at CNET News.com, where he covers hardware, research and development, start-ups and the tech industry overseas.
2 min read
Network Computer Incorporated (NCI) trimmed about 15 percent of its workforce yesterday as the company struggles to make it in the small-computing world.

About 30 of NCI's 200 employees have been dropped from the company's roster, an NCI spokesman said. These employees primarily worked in the direct corporate sales division of NCI and mostly worked in Europe. They will reassigned to positions at parent company Oracle.

No developers were affected by the restructuring, said the spokesperson.

Shares of Oracle dipped to 21 in early trading today, hitting a new 52-week low as one analyst cut his earnings estimates on the company.

Jim Mendelson, a SoundView Financial Group analyst, reduced his 1998 estimates to 85 cents a share from 92 cents a share. He maintained his short-term and long-term "hold" recommendation.

In July, when its staff included about 130 employees, NCI eliminated around 21 employees and reassigned 20 others after its acquisition of Navio.

Although the network computer concept has drawn vast amounts of attention from press and analysts, the concept has had little success in the commercial world.

Only a few companies, including RCA and Funai, a small Japanese company, have agreed to make boxes based on NC reference designs and technology, pointed out Greg Blatnik, an analyst at Zona Research. So far, RCA has only started to release its boxes commercially. Funai's products, on the other hand, have only existed as demonstration units in North America.

The staff changes, Blatnik said, "reflect a real uphill battle to get industry acceptance of their particular technology...Actual deals are fairly sparse."

NCI's own business model also may be contributing to hard times. NCI itself does not make hardware. Instead, the company earns revenue off of non-recurring engineering charges, that is fees for reference designs and development software paid by manufacturers to NCI, and royalties on boxes that have been sold.

Few companies have licensed the designs, making the engineering fees low, Blatnik said, and few boxes have been sold. Zona has issued reports predicting limited acceptance of the NC, especially in the corporate world.

While NCI has emphasized that the affected employees are in sales, a source countered by pointing out that sales representatives are held in fairly high esteem at Oracle.

The layoffs further reflect a drift toward consumer markets that the NC has been taking. The NC was originally positioned principally as a replacement for hard-to-maintain corporate desktop PCs and terminal computers, but increasingly the Oracle subsidiary has been refocusing on the home market since there have been relatively few customers for its corporate software.

RCA's NC, for example, is sold in consumer electronics stores as a substitute for WebTV, retail sources have said.

Microsoft and Intel have also diminished the impact of the NC concept by responding with a number of low-cost, network-centric business computing initiatives of their own.