Tektronix To Split Into Two Companies; Fate of Video Division Unchanged
By: Tom Butts
Tektronix's (Wilsonville, OR) board of directors has unanimously approved a plan that will result in the formation of two separate, publicly traded companies.
One company will be comprised of Tektronix' Measurement Business Division (MBD); the other company will be comprised of Tektronix' Color Printing and Imaging Division (CPID). The decision is an attempt to re-focus the company to stem a downward spiral in earnings.
Tek made the announcement on the same day it released its Q4 1999 financial results. For the quarter ending May 29, 1999 Tek earned $24.9 million, compared with earnings of $42.5 million for the same quarter a year ago. For fiscal 1999, the company posted a net loss of $51.2 million, compared with $82.3 million in earnings in fiscal 1998.
For Tek's VND (Video and Networking) Division, however, the future remains as murky as ever.
Tek officials reiterated their earlier statements that the company plans to sell or find a strategic alliance for VND. Ironically, Q4 was the strongest quarter in fiscal 1999 for VND, with a 20 percent growth in orders. Sales, however, continued to slide -- $77.6 million for the quarter, compared with $83.4 million in Q4 1998.
Sales in Q3 had dropped 25 percent compared with the same quarter in 1998 and the division's continuing fiscal woes prompted the company to consider putting the division on the block earlier this year. Tek moved its video trunking division, Videotele.com to its measurement division in an effort to hold on to one particular area of video networking that showed financial promise.
Rumors swirled the NAB exhibit floor in April about possible buyers for VND, but a month ago, in an effort to stabilize the division's financial status, Tek sources indicated the company would consolidate the operations of its VND division with its Grass Valley subsidiary in Grass Valley, CA.
But officials also hinted they were still considering selling the division.
A company spokesperson confirmed that Tek is still evaluating its options and that "the situation hasn't really changed." The company has closed its Profile server product center in Beaverton and is moving operations to Grass Valley, with a skeleton Profile development and marketing staff remaining in Beaverton. The spokesperson indicated about 150 employees from the Beaverton facility would be laid off over the next several quarters. Profile, VND's gem, is the best-selling server in the broadcast industry, occupying a 40 percent market share.
Tek officials yesterday were upbeat about the prospects for VND.
"VND just finished its strongest quarter of the year," says Jerry Meyer, chairman and chief executive officer for the company. "We are close to two major product introductions, and we expect our new cost structure to help return the business to solid profitability."