Micro D Inc. Reports $567,000 Quarter Loss

Blaming price-cutting in its industry, Micro D Inc., a Santa Ana-based distributor of microcomputer equipment, reported a loss of $567,000 for its second quarter ended June 30, compared to net income of $220,000 for the same period a year ago.

Sales for the second quarter of 1985 were $23.8 million, slightly down from $24 million for the second quarter of 1984.

For the first six months of this year the company posted sales of $47.8 million, down from $54 million for the first half of last year.

Linwood (Chip) Lacy Jr., Micro D’s newly-appointed chairman and chief executive officer said “The decline in our gross margin has been caused by the prevalent price-cutting in the microcomputer distribution business at this time.”

“We are seeking ways to improve our profit margins such as placing a greater emphasis on higher margin products,” he said.

Lacy said that Micro D’s sales had been temporarily dampened by restructuring of the company’s sales force. “The new sales organization is now in place and we expect to see an improvement in sales in the latter part of this year,” he said.

The reported losses follow a major change in management last month at Micro D in which Lacy, previously a senior vice president of marketing for Best Products in Virginia, was named to replace Geza Csige as chairman and Lorraine Mecca as chief executive.

Just days before the management change, Micro D reported that a planned merger with First Software Inc. fell through because of potential tax problems. The merger would have created the nation’s largest wholesaler of personal computer products.