Uncertainty hangs over the future of Stratus Ireland

The future of Stratus Ireland, which employs 350 people at its computer manufacturing plant in Blanchardstown, Co Dublin, is uncertain, after its US parent company was acquired by Ascend Communications in a $822 million deal. Status Ireland is the worldwide manufacturing base for the telecoms software and fault-tolerant technology company. A restructuring plan for Stratus has been postponed, following the stock-for-stock deal which is subject to shareholder approval.

The future ownership of the Blanchardstown plant remains unclear after Ascend, the California-based telecommunications carrier and Internet service provider, stated that the "non-telecom businesses will be set up as separate subsidiaries which Ascend will divest before the end of the year."

Up to 500 positions will be lost within Stratus, according to Ascend, including 350 announced as part of the original restructuring plan, and "an additional 150 positions will be eliminated as a result of the combination".

However "affected Stratus employees" would be offered new positions arising in Ascend "in light of its own strong internal growth rate," Ascend stated.

A spokesman for Stratus Ireland said that the direction the plant would be taking was "up in the air", but its telecoms manufacturing capability would be attractive to Ascend which has no European presence.

"We are the sole manufacturing facility worldwide. All of the hardware comes out of here regardless of what sector it is going into," he said. An IDA spokesman said yesterday that he was sure there would be "no negative implications" for the workers and that discussions had begun with representatives of both companies. "What the details will turn out to be, we have to wait and see," he said.

The acquisition will give Ascend, which had been in IDA discussions prior to the deal, its first presence within the EU and could lead to an expansion of the Blanchardstown plant. "There may be prospects for growth but we really have to wait and see. We are confident of a very good future for the employees out there," he said.

Ascend stated that increasing data traffic and deregulation was encouraging large service providers to deploy networks which would support the integration of voice, video and data. The group's chief executive, Mr Mory Ejabat, said that the acquisition of Stratus' SS7 switches, operations systems software and fault-tolerant platform would be a "major win-win for customers and shareholders". "This combination offers a new architecture for telephony networks, leapfrogging the competition by several years," he said

One source said that an option facing Stratus Ireland is that it would be acquired as part of a management buy-out and that it would continue to manufacture under licence to Ascend.

Stratus reported an after-tax loss of $10 million for its second quarter ended June 28th, compared with an after-tax profit of $17.4 million in the same period in 1997, partly as a result of the Asia crisis impact.

Ascend made an after-tax loss of $124 million in 1997 on a turnover of $1.16 billion. It incurred merger costs of $150 million in 1997, while net sales increased by one third on the previous year.