Data General switches to storage

Hardware Analysts speculate over possible spin-off following reorganisation and refocus of high-end vendor.

Data General (DG) will axe 400 jobs and its Thiin Line serverreorganisation and refocus of high-end vendor. development, in a reorganisation that will refocus on the Clariion storage business.

The latest restructuring to come out of Data General's financial fortunes will result in a $125 million charge in the current third quarter. Significant extra resources will be ploughed into the Clariion Advanced Storage Division, rekindling Wall Street speculation that DG is gearing up to spin off its most successful business.

Clariion will increase its salesforce and its R&D funding as a result.

As well as laying off eight per cent of the workforce, DG will transfer 100 employees, mainly from US businesses, into Clariion.

About $10 million of the $50 to $55 million annual savings it expects to make from cuts will be ploughed into storage.

One analyst commented: 'I'm sure there's a spin-off in the offing,' disputing the fact DG maintained the reallocation of resources was to boost Clariion's emerging Fibre Channel Raid range of storage systems. The savings will come from the smaller payroll and merging of units and facilities, DG claimed.

One of the casualties will be Thiin Line, a range of internet appliances.

These would provide thin servers for the running of Net applications and controlling appliances such as Webphones.

DG refused to comment on the decision to dump Thiin Line, but company sources said the market potential had not proved as great as expected and the vendor wanted to focus on its most successful lines, Clariion and the Aviion servers.

Ron Skates, DG president, said the cuts were down to 'constant margin pressure from competitors'.