Control Data Corp., a multibillion-dollar computer and financial services company that has been in financial ill health, yesterday reported a third-quarter loss of $255.6 million ($6.65 a share) as it continued to write down unprofitable operations.
Control Data spokesman Dick Read said $153.8 million of the third-quarter loss was related to special charges associated with planned divestiture of the company's business products group, which manufactures and sells computer disc packs, computer tapes and floppy discs. The group, which reportedly has revenue in excess of $200 million a year, has been losing money.
The group is for sale and the company said further charges may be necessary if a suitable buyer cannot be found.
Control Data blamed the bulk of the losses on the computer industry downturn, "reflecting reduced customer demand and excess capacity, intense price competition and dramatically changing technology."
Control Data's loss, on revenue of $1.2 billion, compares with a loss of $54.5 on revenue of $1.2 billion for the third quarter a year ago. Last year's third-quarter losses included a $130.2 million write-off against earnings for phasing out the company's IBM-compatible peripheral equipment business. Operating losses for the 1985 quarter were $83.3 million, compared with a $3.7 million operating profit last year. This quarter's loss included special charges relating to restructuring portions of Control Data's domestic and international computer services business as well as writedowns of various other investments. The company declined to detail the additional losses.
"We expected a big quarterly loss, and we got one, but it was not as big as many expected," said Ulric Weil, an analyst for Morgan Stanley. "The company is cleansing itself of operations that don't fit." Weil pointed out that virtually all of Control Data's information processing and related business has been suffering losses over the last year.
"They're between a rock and a hard place," said Tom Crotty, an analyst with the Gartner Group, who added that Control Data "is not an investment vehicle we're recommending for our clients." Control Data last month withdrew a $300 million debt offering and has recently renegotiated loan covenants with its bankers, according to Wall Street sources.
Control Data's consolidated losses for the first nine months of the year totaled $269.6 million ($7.02) on revenue of $3.7 billion, compared with net earnings of $600,000 (one cent) on revenue of $3.7 billion during the first nine months of 1984.
*Separately, Computervision Corp. of Bedford, Mass., a computer-aided design firm, announced losses of $20.7 million in the third quarter of 1985. It also said it will reorganize and lay off an undisclosed number of its 5,200 employes. The company posted losses of $20.7 million on revenue of $105.8 million, compared with earnings of $4.7 million on revenue of $137.1 million in the same period in 1984.