ICL cuts 1,000 jobs to remain profitable: Computer firm going through tough year

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ICL is cutting 1,000 jobs this year in a drive to remain profitable through the continued slump in the computer market. The company, which is now 80 per cent owned by Fujitsu of Japan, was due for a flotation on the London stock market in 1995, but this is likely to slip if tough conditions in the industry prevail.

A source in the company said: 'Our shareholders are committed to flotation in the mid-1990s but that does not end on 31 December 1995. There is no make-or-break date.'

He said that 1993 was proving very difficult but that the company hoped to remain one of the few big European computer companies to stay in the black.

ICL has quietly shed more than 500 jobs in the UK since the start of this financial year and expects the total cuts for 1993 to be 1,000 in Britain and overseas. Last year 1,200 jobs in the UK were cut and a further 800 abroad, bringing the total workforce to 25,000.

The problems affecting the computer industry have also led to many job losses among ICL's main competitors, including the American giant IBM, Bull of France and Siemens Nixdorf of Germany.

Last week Apple Computer, the California-based computer company, announced a net loss of dollars 188m for the third quarter of the year after taking a restructuring charge of dollars 321m to cover 2,500 job losses.

Last year ICL's taxable profits fell to pounds 38.6m from pounds 62.4m a year earlier. Average margins fell 6 per cent to 35 per cent, costing the company pounds 109m.

The problem is most severe in the mainframe business and ICL is looking increasingly to the software and services sector to offset the squeeze on margins.

Dennis Exton, an analyst with Merrill Lynch, said the company was also facing increased competition in software and services, particularly in its key public sector market.

'I believe that some of the orders ICL was confident of getting are not coming through and that could lead to fresh redundancies,' he said.

Mr Exton questioned the wisdom of ICL persisting with the development of new products for mainframe computer users.

ICL, however, said that all sales of computer hardware now account for only half of its total turnover, while mainframes provide only one-eighth.

The company introduced its current range of mainframes in 1990 and intends to launch another in 1996.