Zen Research (LSE:ZEN) today announced that it is dismissing 26 workers, constituting 65% of the workforce of its Multibeam technology division.
The company, which designs and makes components used in DVD and CD equipment, said it was postponing indefinitely further development of its Multibeam product - which makes reading and writing of CDs and DVDs faster and easier.
Zen, which has laboratories in Israel, blamed a continued decline in the global personal computer market and said that talks with licensees and potential partners about developing Multibeam had failed to reach agreement.
"It is bad news and an admission on the part of the company that they cannot find buyers for this higher-end product," said one analyst, who did not want to be identified.
The announcement that the Multibeam project is frozen prompted a 17% slide in Zen stock to 10 pence on Thursday. The losses drove down its market cap to about $23 million. Zen went public in London in April 2000.
Zen also said it will be investing $9 million next year in its chip design business on expectations the PC market would recover.
Meanwhile, Zen revealed $9.1 million losses for the third quarter. Losses for the first nine months of 2001 were $14.4 million.
In early September Zen Research CEO and chairman Davidi Gilo denied plans to cut jobs after speculation arose as to large-scale dismissals. Gilo took over the reins to help rehibilitate the company four months earlier.
Until recently Zen had as many as 140 people on its payroll. Sixty-five people joined the company in April when it bought Jerusalem-based fabless Silicon Value from Tioga Technologies (Nasdaq:TIGA) for $22.3 million.
Zen Research develops optical components for optical media systems, such as CDs and DVDs. Its TrueX core technology enhances the reading capacity of optical media.