Despite a 40% sales increase, Archive Corp. of Costa Mesa said Thursday that its first-quarter profits plunged 88%, to $58,000 from $480,000 a year earlier.
Sales for the three months ended March 29 were $13.1 million compared with $9.4 million reported a year ago.
Archive said executives attributed the sliding profits to the decision to house the company’s new Scorpion data storage device in a case made from molded sheet metal.
While the decision allowed Archive to get the product on the market quickly to capture potential sales early, the company said it was plagued with quality control problems because molded metal cases cannot be made flawlessly in mass quantities. As a result, the company has switched to a new case.
“We expect to complete the conversion to this new improved design by the end of the third quarter, which will enable us to better satisfy customer demands,” said D. Howard Lewis, Archive’s president.
In addition, during the current quarter the company expects to move production of one of its older products, the Sidewinder data storage system, to Singapore, and to move its local manufacturing operations into a new, 115,000 square-foot plant in Costa Mesa.