Expansion Drive at Corona Data Fueled by Injection of $20 Million
Corona Data Systems, hamstrung for much of its four years in business by a lack of financing, has acquired more than $20 million and begun stepping up its efforts to capture a bigger share of the computer equipment market.
The Thousand Oaks-based company disclosed last week that it is dramatically expanding its product development and sales units as a result of securing the new funds from the Daewoo Group, a South Korean conglomerate. Analysts familiar with privately held Corona said the investment would help ensure its future in the perilous computer equipment business.
“It probably means they don’t get shaken out” of the business, said Michael Murphy, editor of the San Francisco-based California Technology Stock Letter. “It gives them some credibility in the marketplace.”
‘Pretty Good Money’
David M. Fradin, who tracks the personal computer market for San Jose-based Dataquest, added, “If they keep their overhead down, and keep their sales plans reasonable, they can make some pretty good money.”
Daniel R. Carter, Corona’s president, declined to give details of Daewoo’s investment other than to say it consisted of cash, loan guarantees and credit lines. He said Corona also is considering exercising its option for another $10 million in credit from Daewoo.
Carter would not specify how much of a stake Daewoo acquired in Corona but said it was less than a controlling interest. He added, however, that a former Daewoo executive, G. B. Song, was hired as Corona’s treasurer partly because of the deal.
In addition, Carter said, Daewoo will name one or more directors to Corona’s board.
Carter said Daewoo probably made the investment in hope of selling its stock at a profit in two years, when Corona expects to offer its shares to the public. Daewoo officials could not be reached for comment.
Arrangement Unchanged
Before Daewoo made the investment, the Korean company was manufacturing many of Corona’s products. Carter said that arrangement will remain unchanged.
Corona will use its new funds to increase its Westlake Village-based engineering staff, which is in charge of designing the company’s computers and related products, from 45 to 96 by late spring.
The Daewoo funds also will be used to increase Corona’s sales force from 31 to 100 by the end of next year. One of the principal missions of the enlarged sales force will be to sell three new products announced by the company last week.
The new products primarily are aimed at the growing number of engineers and designers who draft plans on computers instead of on paper. Corona introduced a personal computer compatible with the powerful IBM PC-AT, an adapter to enable that computer to produce color graphics for drafting applications and a color monitor on which the work can be seen.
Seen as Good Move
Although analysts viewed Corona’s foray into the so-called computer-aided-design market as a good move, they said the new equipment does not yet represent a major advance for the company.
Laura Lundquist, a senior analyst with Future Computing, a Dallas-based market research firm, said the products are “logical extensions of their product lines. It’s not anything earth-shattering.”
Nevertheless, Corona officials are trying to change the public’s perception of the company. The company said it will change its name to Cordata Inc. in January to help erase its image as simply a manufacturer of IBM-compatible personal computers and to reflect “the changing, growing and expanding nature of our business.”
Corona, which said it had more than $50 million in sales for the fiscal year ended Sept. 30, employs 235 workers, including about 200 in Thousand Oaks, Westlake Village and Newbury Park.
