Relations between systems integrator Data General (DG) and its parent EMC appear to have soured after the two disagreed about profit expectations.
However, the real casualties in the middle of the disagreement are 55 employees in DG's sales and marketing division who are now facing unemployment two weeks short of Christmas.
A disagreement erupted when Data General's managing director, Dan O'Hara, was asked to submit profit forecasts to EMC. According to outgoing marketing director Andre Michau, O'Hara's forecast of a slight increase in last year's profit was unacceptable to EMC.
Michau said EMC asked O'Hara to submit two business plans forecasting profits. "One was our original plan which forecast a slight increase on last year," Michau said. "The other outlined how EMC's expectations could be achieved.
"[EMC's] expectations were greater than DG could provide. For the server market, the jump between what was previously expected and what DG could achieve was unrealistic," he said.
EMC's managing director for Australia and New Zealand, Mike Foster, at first denied his company demanded higher profits from DG.
EMC's profit expectation was believed to be an increase of around 20 per cent but neither O'Hara or Michau would confirm the figure.
Foster denied EMC initiated the redundancies and said, "the restructuring came through DG management, not us. It was their decision."
A weary Dan O'Hara said: "Data General will no longer go after new business. It will instead look after its installed customer base." Resources have been redirected into customer service and DG has created a new Customer Liaison department to service its 1500 customers across industries including the legal, local government and healthcare areas, he added.
O'Hara was insistent the restructuring would not affect DG's ability to service clients nor its contractual agreements with partners. With DG leaving the enterprise space, a lucrative hunting ground for its competitors has opened up.
Local PC manufacturer ASI - a DG partner in the Federal Government's health contract - is keen to pick up DG's corporate clients.
ASI director Maree Lowe said: "It's pretty tough those people losing their jobs before Christmas. And I'm surprised DG is pulling out of the server market as it has many large corporate clients; DG's absence will leave a large hole in the market.