Hayes European arm faces bleak future

The future of the European arm of modem company, Hayes is looking uncertain after the US division ceased operations at the beginning of this week.

On Monday, the company said it plans to liquidise its US assets and laid off 250 staff. The European business will continue to operate for the next couple of months: unlike the Asian and US divisions, it remains profitable and a source close to the company said negotiations are currently underway to find a buyer for it.

Problems began for Hayes when sales for its V90 modem were far lower than expected during 1998. Overproduction and two acquisitions of smaller technology companies had a serious effect on cashflow and it was forced to seek Chapter 11 protection from creditors in October.

Analysts are not holding out much hope that the company will be saved. Ashim Pal, senior research analyst at Meta Group, said: "The future for the European arm is bleak. It is unlikely anyone will buy it for the technology, and although the installed base and brand name is worth some money, any possible buyer will eventually migrate users over to their own."