Firm’s Loss of Executive Dims Future : Conner’s Exit Seen as Serious Blow to Computer Memories
Just one week ago today, Finis Conner was in Palm Springs telling a computer conference that he would make a difference in helping to turn around Computer Memories, a troubled Chatsworth-based disk drive manufacturer.
Two days later, Conner resigned as chairman and chief executive. He had held the jobs less than one month.
Conner’s resignation is the latest development in what has been a tumultuous two months for the once high-flying manufacturer of disk drives, which provide the memory functions in personal computers. Analysts say Conner’s resignation further damages Computer Memories’ reputation as a stable disk drive supplier and decreases its chances of attracting the new customers it needs in the wake of the August decision by computer giant IBM not to renew its contract with the company after Dec. 31.
“In the near term, I think this is going to be disastrous. In the long term, it will be a big blow. I’m not sure if they will recover,” said Steven L. Ossad, who follows Computer Memories for the New York brokerage firm of L. F. Rothschild, Unterberg, Towbin.
Met With Directors
Conner submitted his resignation one day after a Wednesday meeting with the company’s board of directors in San Jose. Conner would not say what was discussed at that meeting.
One former executive with close contacts still in the company said Conner disagreed with other directors over Conner’s plans to bring in his own team of high-paid executives, some of whom had worked with him at Seagate Technology, a Scotts Valley disk drive maker Conner helped start in 1979.
Another area of disagreement, the former executive said, was a forecast by Conner that it would take until the middle of next year to turn the company around. The executive said other directors wanted an earlier turnaround.
In an interview Monday, Conner said that bringing in his own staff was not an issue. “There was never any disagreement,” Conner said. “We were going to bring in qualified people to help run the company.”
Wouldn’t Discuss Timetable
Conner declined to discuss whether his timetable was an issue. He said he did not want to elaborate because he is still negotiating with the company over the terms of his departure.
Analysts said Conner may also have concluded that turning around Computer Memories would be too difficult. “Putting Finis in and having him go away with no explanation after only three weeks makes it look like Finis thought it could not be saved,” Jim Porter, editor of Disk/Trend Report, said.
Another theory of analysts is that Conner was not given enough freedom to operate by Irwin Rubin, who stepped down as chairman to become vice chairman when Conner was hired. Rubin, who had insisted that Conner would be the boss, remained Computer Memories’ largest individual shareholder.
Rubin did not return calls from The Times.
The company has not announced its strategy for permanently replacing Conner. Rubin has resumed the duties of chief executive in the interim.
Analysts had lauded the company for hiring Conner, 42, considered an expert salesman with extensive industry contacts cultivated during his days as an executive with Seagate and also Shugart & Associates of Sunnyvale, which he helped launch in the mid-1970s. Analysts had said that with Conner as chief executive, Computer Memories might attract customers to replace its IBM contract, which accounted for 81% of Computer Memories’ $50.5 million in revenue for the quarter ended June 30.
Needed ‘Cultural Change’
“They needed to make a significant cultural change, which was one reason why racing to get someone from outside the company was a good idea,” said Michael Murphy, editor of the California Technology Stock Letter in San Francisco.
With Conner gone, analysts said, the company is facing a number of difficult decisions that probably will include more layoffs and closing part of its manufacturing plant in Singapore.
Conner had little time to make changes at Computer Memories. He did announce two weeks ago a tentative agreement with Atasi to make and sell two hard-disk drives similar to those made by the San Jose-based firm, which is now operating under protection of the federal bankruptcy courts.
