Md. firm's merger partner cuts about 15% of payroll Hayes Corp. paring costs after marriage with Access Beyond

January 27, 1998|By COX NEWS SERVICE

ATLANTA -- Hayes Corp. announced a slash in company costs yesterday that included cutting about 15 percent of its already-thinned payroll.

The troubled Norcross, Ga., modem-maker, which merged a month ago with Maryland-based Access Beyond, has cut 100 of its 700 jobs in its first several weeks as a publicly traded company.

The moves will pare more than $4 million per fiscal quarter in costs, said Ron Howard, former head of Access Beyond, now Hayes' chief executive officer.

"We are not doing this just to diminish the losses," he said. "We are approximately a $225 million company, and there's no real reasons why we are not profitable."

To pay for the merger and restructuring, Hayes will take a "significant" charge in its fourth fiscal quarter. Those results are to be announced next month.

The work force has shrunk about 45 percent in two years, and recent cuts were carried out in the weeks after the merger, Howard said. "This is not something theoretical, and it's not something that is going to linger." Jobs were cut "across the board," including positions in sales, marketing, administration and research and development, he said.

Also yesterday, the company announced a new credit arrangement with NationsCredit, shifting from a $35 million to a $50 million line of credit at a lower interest rate. The new deal lets the company borrow money more cheaply.

Hayes is also renegotiating with various consultants and vendors, aiming to trim those expenses as well, Howard said. "We say, 'This is good work, but you are being paid too much.' This is the kind of thing you say when you are an aggressive company and you want to reduce your expenses."

Hayes Corp., founded by Chairman Dennis Hayes 20 years ago, helped create the modem industry before falling on hard times. The company filed for bankruptcy, emerging in 1996 with a new chief executive and several profitable quarters. But the company ran into trouble last year. CEO Joe Formichelli resigned in September.

In the past four quarters, Hayes has lost $18 million on revenues of about $200 million. Officials blamed much of the loss on consumer confusion over two competing standards for the 56 kbps modem.

But Hayes now hopes for an agreement on a standard next month.

Pub Date: 1/27/98

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