Speed of telecom collapse overtakes 100 in Columbia

Many lose jobs 16 months after takeover made millions for ex-bosses

July 18, 2002|By Andrew Ratner | Andrew Ratner,SUN STAFF

In another measure of the speed of technology's fall, 100 people in Columbia were laid off yesterday just 16 months after a Florida company paid $184.6 million in cash to buy their company.

Citrix Systems Inc. announced yesterday that it is closing the former offices of Sequoia Software Corp., whose three investors made millions when they sold to Citrix in March 2001 as they sensed the sector was starting to crater.

Citrix will pay two months in severance to about 100 employees being laid off, a source said.

About 20 other employees are being moved to a smaller sales office in the region.

Citrix also offered jobs to about 20 people, mostly engineers, if they are willing to relocate to the parent company's base in Fort Lauderdale.

When Sequoia's founders - attorney Mark Wesker and engineers Anil Sethi and Jack Schuster - each gained millions in the sale to Citrix, some investors complained then that the selling price of $5.64 a share in cash was less than the stock's initial public offering of $8 a share in the spring of 2000, and much less than its peak of $21.75.

The partners, however, said that they detected a downturn in the market.

They were pleased to have found a solid buyer they had worked with before who was willing to maintain their technology and their employees, they said.

Citrix did employ the technology in a new product that allows companies to create Internet portals so that suppliers and others can do business with them in a secure site on the World Wide Web.

As for the employees, however, they are part of a 10-percent work force reduction that involves 125 other layoffs across the company, including some overseas. Citrix now employs about 1,680 people.

Its stock yesterday closed up 29 cents to $5.60 a share on the Nasdaq stock market. Citrix shares traded at $17.69 when the Sequoia purchase was announced.

Citrix also reported yesterday disappointing results for the second quarter that ended June 30.

Revenue was down 20 percent, to $118 million from $147 million, and net income fell 50 percent, to 6 cents a share from 12 cents a share.

"This is purely driven by financial reasons," Citrix spokesman Eric Armstrong said. "We have to bite the bullet and cut back on head count."

The company didn't regret purchasing Sequoia, he said.

"It was an important acquisition to give us a kick start" into Web portal technology, he said.

Richard W. Story, director of economic development for Howard County, said the county had offered property tax incentives a year ago but the deal was never completed.

"Clearly, we are disappointed," Story said. "We looked at it as a local, home-grown success story. They had done a lot for our economy."

Scott Kessler, an analyst with Standard & Poor's in New York, said that he counts Sequoia's founders on a short list of technology entrepreneurs, perhaps headed by sports owner and Internet billionaire Mark Cuban, who wisely got out before the bubble burst.

"There are not a lot of stories like that," Kessler said.

"When Citrix did this deal, they didn't anticipate the kind of layoffs that have resulted. It's difficult for companies across the technology landscape."

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