Six-Point Strategy Defined
Worldwide Leadership in Access & Broadband Systems Is Focus of General DataComm
MIDDLEBURY, CT., Dec. 18 - General DataComm Industries, Inc. [NYSE: GDC] today
announced a six-point restructuring initiative called Millennium Thirty, which is
designed to secure GDC's leadership in the world's fast-growing network access and
broadband markets. Components of the M30 initiative are:
- Creating Broadband Systems and Network Access Divisions as profit centers;
- Integrating product responsibility among Engineering, Marketing and Sales;
- Expanding support capabilities of VITAL Network Services;
- Reducing product development cycles and launching four major broadband and access
products in 1999;
- Partnering or divesting non-core resources; and
- Realigning personnel to support the new market-driven focus.
As a result of the restructuring portion of the M30 strategy, GDC expects to
incur a charge of approximately $2.5 million against first quarter 1999 earnings. The
company expects to more than offset these expenses in fiscal 1999 through expense
reductions resulting from streamlining business operations.
"The primary objective of the M30 strategy - named for convergence of the
year 2000 and the company's 30th anniversary - is to leverage GDC's core engineering
strengths to further grow our broadband businesses," said Chairman and Chief
Executive Officer Charles P. Johnson. "To achieve this goal we will become more
market focused, continue to create innovative products, speed our product development
cycles and expand our support services."
"M30 represents an intense focusing of our energies and resources to
capitalize on tremendous market opportunities," said President and Chief Operating
Officer Ross A. Belson. "Our two biggest successes have been the market acceptance of
our new broadband systems and growth of our VITAL Network Services business."
"Our new organizational structure maximizes these strengths and goes well beyond
redrawing our organization chart and reducing expenses," Belson added. "Our goal
is to create a company with the drive and zeal of an entrepreneurial start-up combined
with the resources and experience of an established player."
Businesses worldwide are recognizing the operational economies of multiservice networks
and rapidly adopting them as their next-generation telecommunications transmission
technology. In fiscal 1998 [ended Sept. 30, 1998], GDC grew its ATM broadband business by
more than 30 percent; a rate it expects to exceed in FY99.
Broadband and Access profit centers
Prominent among the six M30 strategies is the creation of the Broadband Systems
Division and the Network Access Division as discrete profit centers, each with its own
vice president and general manager and integrated operational structure.
Keith A. Mumford, currently GDC vice president of marketing, will assume immediate
responsibility as vice president and general manager of the Broadband Systems Division.
James J. O'Meara, currently vice president of the National Resellers Division, will
assume immediate responsibility as vice president and general manager of the Network
Corporate functions outside of the divisions will be Corporate Communications,
Marketing Services and Administration, Finance, Human Resources, Customer Service,
Corporate Staff and Operations, which includes manufacturing and technology support
services. International Sales will report to the company president.
Three responsibilities integrated
The previously separated Engineering, Marketing and Sales organizations will be
integrated into the product line-oriented P&L structures, which will give them a
unified market-driven focus. The three organizations will report to their respective
business unit general manager. Previously, they reported to separate functional vice
Product specialization among the Sales forces will provide customers with contact
personnel who will easily pinpoint their unique business needs, who will match products to
meet those needs and who will communicate new-product opportunities to the Engineering
Expanding VITAL Network Services
VITAL Network Services provides network data services to GDC and other companies
worldwide. The unit's market strength is its ability to support a broad range of systems
among a wide variety of industries. Created in 1997 servicing one customer, GDC; VITAL
today supports 21 corporate customers around the world, approximately half of which
compete in the same markets as GDC.
[VITAL's successful business model was used as a broad outline in developing the
Broadband Systems and Network Access structures being announced today.]
GDC will expand VITAL's foundation for multi-technology and multi-vendor success in two
- Continued acquisition of competitive service suppliers in order to rapidly and
economically broaden the unit's customer base; and
- Foster aggressive growth of VITAL's indirect sales channels, which is also seen as a
cost-effective growth strategy.
Shorter cycles; new products
Critical to satisfying the rapid growth of multimedia services is the speedy
development and manufacture of new products and services once their potential has been
identified. GDC will begin to reduce the product development time-to-market and will
deliver its next generation broadband products in the First Quarter of the new millennium,
Coordinated with shortening of product development cycles, the Broadband Systems
Division will launch two major new carrier-class products in 1999. Both will be designed
to increase functional scope of broadband networks and to further reduce the cost of
delivering multimedia across the world's existing telecommunications networks.
The Network Access Division also will launch two major products, which improve service
providers' ability to offer a variety of new and lower-cost communications services.
These major product launches will be highpoints in an ongoing series of product and
service introductions expected throughout 1999.
Business unit & property strategies
GDC is seeking strategic partners or buyers for its Technology Alliance Group [TAG],
Waterbury, CT.; Multimedia Research Center [MRC], Montreal, Canada; and the Advanced
Research Center [ARC], Essex, UK. While the three groups have valid business applications,
they no longer fit with GDC's growth strategy.
GDC also believes that a prudent use of funds is to lease property rather than tie up
capital in real estate. Therefore, the company is seeking to sell its current headquarters
building in Middlebury, CT., and its European headquarters building in Wokingham,
Berkshire, UK. When sold, GDC will move those staffs into leased buildings.
Refocusing the company's operations is designed to make GDC more responsive to market
demands and operationally more efficient. As a result, several organizations will be
reorganized and/or consolidated. This will reduce our workforce by approximately 200
employees from among the total of 1,413 people, or about 14 percent.
About General DataComm
GDC is a leader in the design, development and manufacture of multiservice
communications systems for service providers and enterprise businesses. The GDC APEX®
multiservice switching platforms are used extensively within the world's largest public
ATM Wide Area Networks. A broad range of Advanced Network Access products provide
integrated E1, T1, IDSL, and HDSL access to public and private networks; all managed under
a distributed, open network management framework, ProSphere.
GDC is headquartered in Middlebury, CT., USA, and has an extensive network of
subsidiaries and partners located throughout North America, South America, Europe, the
Middle East, Asia and the Pacific Rim.