Sybase Inc. has reorganized top management and will repurchase up to $25 million in outstanding common stock, as well as take a $70 million restructuring charge, in an attempt to return the company to profitability by the start of the second quarter.
The company announced the moves today after saying on Monday that it is laying off 600 of its nearly 6,000 employees worldwide. About $40 million of the $70 million in restructuring charges will come from the company's cash reserves which exceeded $200 million at the end of last year, Sybase CEO Mitchell Kertzman said in a conference call today.
The restructuring announced today is expected to decrease the database maker's costs by $100 million this year.
Starting today Kertzman will share the CEO title and duties with John Chen, so far president of the company, in the newly created Office of the Chief Executive. While Chen will be responsible for day-to-day management of the company, co-CEO Kertzman will drive and develop the vision of the company and promote it externally.
Kertzman and Chen both denied that the new management structure is a reflection of failure on Kertzman's part, stressing that sharing responsibility had been planned ever since Chen was recruited from Siemens Nixdorf Informationssysteme AG (SNI) last July.
"Reports of my death were greatly exaggerated," Kertzmann said citing author Mark Twain. He added that he proposed the new structure to Sybase's board of directors and not vice versa.
Chen has been informally sharing CEO tasks with Kertzmann for six months now. "It works well and we are simply formalizing this structure," Chen said.
Meanwhile, Kertzman said he will eventually drop the CEO title and act as a "very active" executive chairman of the company.
Chen denied rumors that a majority of the layoffs at Sybase are coming from the company's Jaguar division. "That is outright wrong," Chen said. The strength of Jaguar, the company's component transaction server, and Sybase's PowerDynamo Web-database application server will be clearly demonstrated in July when the products will be part of the information system of the soccer World Championships in France. "We are expecting 100 million hits a day," Chen said.
The layoffs and today's actions were prompted when the database maker uncovered improper accounting methods at its Tokyo-based subsidiary, Sybase KK, leading to inflated revenues. The company was forced to restate its financial results for all of fiscal 1997. Sybase posted a full-year loss of $55.4 million, or 70 cents per diluted share instead of the profit it expected to turn.
Sybase also said that Jack Acosta, who is senior vice president and chief financial officer, has been promoted to executive vice president and will report to Chen, while Michael Gardner was appointed senior vice president of worldwide sales. Gardner had worked at ACT Networks Inc. and also has been at IBM Corp. and Hewlett-Packard Co.
The move is designed to focus on three growth areas -- World Wide Web computing, occasionally-connected computing and data warehousing, Kertzmann said.
The stock repurchase will take place periodically using the company's available cash balances, Sybase said.
