Silicon Systems Reports 3rd-Quarter Profit Plunge

Blaming the computer industry’s persistent sales slump, Silicon Systems Inc. of Tustin reported Thursday that third fiscal quarter profits plunged nearly 90% from a year ago while revenues dropped by 33%.

For the three months ended June 28, the integrated circuit manufacturer posted profits of $261,000, compared to $2.5 million in the year-ago period. Revenues for the quarter were $11.1 million, versus $16.3 million last year.

For the first nine months of the company’s fiscal year, revenues were $40.1 million, about 5% higher than a year ago. However, profits for the nine months were $2.7 million, about half the $5.3 million posted a year ago.

Despite the bleak performance, Carmelo J. Santoro, Silicon Systems’ president and chief executive, said the company has noticed a modest upswing in orders for its silicon chips, the tiny devices that make up the artificial brain and nervous system of any piece of computerized equipment.

Santoro said third-quarter orders totaled $11.8 million, nearly three times the amount received in the previous three-month period. He added that the company’s order backlog increased by $1 million to $21 million during the quarter.

For the last nine months, Silicon Systems has attempted to bolster its profits by cutting costs. So far, a spokesman said, the company has frozen all wages; shut down its plant for about eight days; eliminated about 60 jobs, approximately 10% of the work force; cut its out-of-town travel budget and eliminated the free soda pop vending machines in its offices.