Talks on Aid for Ailing Computer Firm Ended
Negotiations with private investor Larry D. Doskocil to pump $3 million more into the corporate coffers of Irvine’s ailing Computer Automation Inc. have fallen through, the company said Friday as it disclosed more red ink for its first fiscal quarter ended Sept. 30.
The company, which has lost more than $20 million during the past three years, said it is negotiating with several other parties to obtain the critically needed funds, George Pratt, chairman and chief executive officer, said in a release.
Pratt said the company expects critical cash-flow shortages during the last half of the fiscal year unless industry market conditions improve or additional financing is obtained.
Doskocil, a Hutchinson, Kan., businessman, had bought $3 million worth of the company’s debentures this summer. However, he declined to exercise an option he held to purchase 23.5% of its common stock, which would have made him the company’s largest stockholder.
Neither Pratt nor Doskocil could be reached Friday to explain what happened to their talks.
Computer Automation reported a net loss of $3.6 million for its first quarter ended Sept. 30, compared to a net loss of $589,000 for the same quarter last year. About $238,000 of last year’s first-quarter loss was attributed to discontinued operations.
Revenues also decreased, hitting $4.9 million for the first quarter, compared to last year’s quarterly revenues of nearly $11.1 million. Revenues for last year’s quarter were restated to reflect the discontinuance of the Commercial Systems division, which is expected to close this month.
Pratt cited depressed conditions throughout the electronics industry as the primary reason for the loss.
The reduced sales volume and the resulting underutilization of existing plant facilities accounted for much of the reported loss in the first quarter, despite substantial progress made in reducing total operating costs, Pratt said.
Besides cost-reduction measures already implemented, the company expects to complete during the current quarter its previously announced plans to close its 90,000-square-foot Richardson, Tex., facility.
Pratt said the company’s sales of automatic test equipment and computer parts decreased from the levels achieved during the like quarter a year ago.
When the company reported last month record losses of $8.8 million for fiscal 1985, ended June 30, company officials attributed a large part of it to write-downs and write-offs required by recent efforts to reduce and restructure the floundering computer and electronics operations.