Odetics Predicts Loss for Its Latest Quarter

Although it recently has obtained $5.7 million worth of new contracts, Odetics Inc. of Anaheim said Tuesday that it expects to report a loss for the first fiscal quarter ended June 30, largely because of the cost of shifting more of its high-technology business into robotics.

The company declined to reveal the extent of the quarterly loss, only the second for the 16-year-old firm, which has earned a national reputation for its space system tape recorders and time-lapse video security systems. However, Odetics founder and Chairman Joel Slutzky predicted that the just-concluded quarter would be the “weak one” of the company’s 1986 fiscal year.

Slutzky said the firm suffered because some contracts were signed three months later than expected and because the company had already hired staff to cover the anticipated increase in its workload.

Slutzky, whose company earned $476,000 on sales of $31.4 million last year, acknowledged some disappointment over the loss. Still, he said, Odetics, which surprised the high-tech world two years ago with a six-legged, 370-pound demonstration robot controlled by 10 on-board computers, never expected the move into robotics to produce immediate profits.

“It’s a paradox,” Slutzky said. “The better we are at winning the robotics contracts, the worse we look in the short term.” So far, the company has won contracts to develop robots that can handle nuclear waste, fight shipboard fires, harvest agricultural products, sweep mines and guard military establishments.

In the last six weeks, Odetics has won three robotics development contracts, worth a total of $4.2 million. It was, by far, the largest cluster of robot work that the company has received since it began working on its “functionoid” in the early 1980s.

Retain Ownership

The company also received a $1.5-million contract to deliver additional time-lapse security systems to RCA.

Another factor contributing to the loss, according to Slutzky, is the fact that Odetics wants to retain ownership of the technology used on its contract work and therefore does not charge customers the full cost of developing new robotic products.

The result, he said, is that the company often spends a good portion of what it takes in on each new contract. “But I always say we’re playing for a long-term gain,” Slutzky added. “We have to be patient about earning our money.”

Significant Advantage

William Relyea, an analyst with F. Eberstadt & Co. in New York, says Odetics has a good chance of making money. Relyea said that, although a variety of defense contractors and other large corporations are considering development of robots to perform a variety of dangerous or tedious tasks, Odetics has a significant advantage.

“They’re on the cutting edge,” he said. “A lot of what they’ve shown hasn’t been shown by anyone else. . . . There’s a good chance that they will be a major participant in what could be a very big market.”