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Six-Point Strategy Defined
Worldwide Leadership in Access & Broadband Systems Is Focus of General DataComm Restructuring

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 Access Division.

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 presidents.

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 organization.

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 ways:

  • 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, 2000.

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.

Realigning personnel

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.

 

General DataComm Contact
Phone: 203.574.1118
Fax: 203.758.9369

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