Wall Data to Post Q1 Loss, Cut Jobs; Founder and CEO Resigns

Computergram International, August 10, 1999

Connectivity software and application development company Wall Data Inc said Monday that it will post a first-quarter loss and announced that chief executive John Wall has resigned. The Kirkland, Washington-based company also said it would cut staff as it restructures to combine the two major business units - Rumba and Cyberprise - it separated only recently. Wall Data anticipates revenues for the quarter will be between $19.5m and $20.5m, resulting in an operating loss between $11.5m and $12.5m. Analysts surveyed by First Call had already been expecting a net loss of $0.45 a share. The company says it will release final results for the quarter on August 19, after it calculates its income tax provision and evaluates the potential write-off of deferred tax assets.

Wall, who founded the company in 1982, is leaving "to pursue other interests," according to an official statement. In the wake of his departure, the board of directors has named Kevin Vitale, president of the flagship Rumba connectivity business and formerly chief operating officer of the overall company, as the new president of Wall Data Inc. Vitale joined Wall Data in 1993 and is credited with the start-up and growth of the company's service business, which accounted for $30m in revenue, or just over 20% of the total, in fiscal 1999.

The company also said it will now consolidate the web-to-host and related server-based administrative and security technologies of its Cyberprise product line into the Rumba product line and will essentially give up on the corporate information portal market. As a result of that decision, worldwide operations will be structured around the Rumba business and the company will take a one-time charge of between $13m and $14m during its second fiscal quarter for unspecified workforce reductions, facility closures and certain asset write-offs. The non-cash portion of the charge is estimated to be $5m.

The company had already enlisted investment bank Bear Stearns & Co to assist in evaluating its strategic alternatives and now says the bank's review of the business should be complete by August 31. Wall Data had warned in May that fourth-quarter and full-year results would be a disappointment and blamed the revenue shortfall on disruptions stemming from the restructure of the company into two separate businesses in the first place. Apparently the reorganization of sales force and the transfer of customer relationships and service personnel had produced a more significant impact on the top line than it anticipated.