Presstek says ‘deep’ layoffs loom

Presstek Inc. will slash its workforce in an attempt to regain profitability after posting a third-quarter loss of more than $5.4 million, the company announced Monday.The printing equipment company, which employs 130 people in Hudson and 450 overall, would not say how many employees will be laid off, from which facility or how long its “profit improvement action” would take.The company, which is based in Greenwich, Conn., also has a manufacturing facility in South Hadley, Mass., a distribution center in Des Plaines, Ill., and European headquarters in the United Kingdom.CEO Jeff Jacobson said in a conference call that most of the cuts would be achieved through “headcount reductions and realignment of responsibility to right-size our business.” An $11.2 million cut represents about a quarter of the company’s annual operational expenses.”Obviously, we will have to cut very deeply,” Jacobson said in response to a question by NHBR the number of layoffs involved.Jacobson added that when he announced to his employees on Friday the severity of the cuts, “it was my darkest day” as a CEO.It’s not clear whether some of the cuts already have taken place. Overall the number of Presstek employees in September was 50 lower than at the same time last year.The company expects to add $1 to $2 million in restructuring charges in the fourth quarter, said chief financial officer Jeffrey Cook in the conference call.Presstek’s third-quarter net loss of $5.4 million, or 15 cents a share, is more than three times the $1.5 million lost during the third quarter of 2010, bringing year-to-date losses to $8.7 million.That’s in addition to net losses of $60 million during the last two years. Revenues were $26.9 million, down 14.4 percent.In its outlook, the company expects a similar money-losing quarter before starting to turn a profit, at least operationally.The losses have shaken investor confidence and caused the company’s stock price to plummet. It recently received a delisting warning from the Nasdaq exchange because the company’s stock price has not remained over $1.Jacobson blames the downturn in the economy, which particularly hurts small presses in smaller markets, as well as the move away from printed to digital communication.Presses were running slightly over 80 percent of capacity before the recession hit, but just over 60 percent afterwards, he said.He said Presstek keeps rolling out more efficient presses that are well received, but managers are putting off replacing or even servicing outdated equipment until the economy picks up.Jacobson hoped that will be next year. With the cuts, he said, the company should be profitable in 2012.”You put your blinders on” so that the company would do “what you have to say to stay vibrant,” Jacobson said to conclude the conference call. But when the blinders come off, Jacobson said he could see “human beings you know and care about as victims of the economy.”He said some of the blame lies with “a group of people in Washington who just care about being elected,” but in any case, he promised that the workers “we have not come though this pain” without becoming a more stable company that won’t have to make such drastic cuts in the future. — BOB SANDERS/NEW HAMPSHIRE BUSINESS REVIEW