December 13, 1996 11:00 AM ET

Rogers' departure seen as necessary step toward Cyrix's turnaround
By Lisa DiCarlo

  The resignation of President and CEO Jerry Rogers on Monday is considered just the first of many steps Cyrix Corp. must take to secure a spot as a contender in the processor game.

Because Rogers-who co-founded Cyrix in 1988-had become what many considered an albatross, his resignation should yield positive results, according to former employees and outside observers. Rogers will continue to hold a seat on the board of directors.

"The first step to recovery is cutting the cancer out," said David Wu, an analyst at First Chicago Corp., in New York. "That's been done, and now the question is how fast they'll recover."

Cyrix's next step will be to dismantle its 9-month-old desktop PC systems group, sources said. The systems business, charged with selling corporate desktops built around the Richardson, Texas, company's 6x86 processor, never gained momentum, costing Cyrix millions of dollars in an advertising campaign that never yielded significant sales. The company has posted two consecutive quarterly losses totaling $23.3 million.

The systems group, which at its peak numbered between 20 and 30 people, is now down to only a handful, sources said.

"There is nothing left. They're out of the [PC systems] business," said one former manager who declined to be identified.

Company executives declined to drive a nail in the systems group's coffin, but acknowledged difficulties.

"We started the systems unit to showcase the technology and have a platform for getting systems out for review," said Jay Swent, senior vice president of finance and administration and interim chairman of Cyrix's Office of the President. "In that, we've been successful, [but] we're evaluating whether to go forward."

Some analysts believe a more marketing-driven CEO who can sell the company's well-regarded processors could help Cyrix turn the corner.

"They still have a very good design team, and they should choose a niche strategy and not compete with Intel [Corp.] head-to-head," said First Chicago's Wu.

Cyrix appears to be doing that with its integrated Gx86 processor. The Pentium-class chip, due early in 1997, packs PCI and memory controller, graphics and audio into a chip for sub-$1,000 PCs-a market in which Intel is not involved.

The processor is being evaluated by such heavyweights as Packard Bell/NEC, and Compaq Computer Corp. has reportedly signed on to use the chip in systems next year, several sources said. Because of its high level of integration and low cost, the chip is also well-suited to forthcoming network computers.

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