Eagle Posts $1.95-Million Quarter Loss : Computer Firm Pins Profit Hopes on ’86
Eagle Computer Inc. said Tuesday that it fell short of turning a profit during its fiscal first quarter but managed to reduce its losses compared to both the previous three months and the first quarter of last year.
Eagle had originally predicted a return to profitability by September, but shaking the grip of the slump that haunts the microcomputer industry has been tougher than company officials thought. The company has revised its projection of a profit into fiscal 1986.
During the three months ended Sept. 28, the Garden Grove company posted a net loss of $1.95 million, down sharply compared to a loss of $2.3 million in the quarter a year ago. Revenues for the quarter fell to $1.49 million, down 62.8% from revenues of $4 million during the like period last year.
Start-up problems arising from the transition of most of Eagle’s manufacturing operations to South Korea were to blame for the decline in revenues, Gary Kappenman, Eagle’s president, said in a statement.
“The transition from domestic to offshore manufacturing that occurred during the quarter caused temporary shortages of some of our products, which impacted revenues,” Kappenman said. “However, the offshore product is now arriving as scheduled and we are catching up with our back orders.”
Founded in 1978, Eagle was one of dozens of companies that leaped into the personal computer market following the introduction by IBM of its desk-top computer. However, as the highly competitive industry began to suffer the effects of consolidation, Eagle’s revenues and profits began to fall.
The company has managed to stave off bankruptcy through a series of cost-cutting measures, including massive layoffs that have reduced Eagle’s work force to 79 from a high of 330 in early 1984. In addition, several top managers recently have taken pay cuts ranging from 10% to 42% in an effort to reduce losses.
Kappenman said that if Eagle can obtain the $3.6 million needed to successfully introduce a new multiple-user computer system that would take it out of head-on competition with IBM, profits could be attained by the fiscal third quarter.
“If I can launch that product in January, then I believe we will be profitable during the quarter that ends in March,” Kappenman said, adding that Eagle hopes to raise the money from private investors but is willing to undertake a rights offering if necessary.
“We’ll do whatever we need to do,” he said. “It’s important that we get this product on the market.”