Vector Graphic, the Westlake Village company that grew from a kitchen-table business to the forefront of the personal computer revolution, said Tuesday that it has filed for protection from its creditors under Chapter 11 of the U.S. Bankruptcy Code.
At its peak in its 1982 fiscal year, Vector had $36.2 million in sales, $2.4 million in profits and 425 workers at its Thousand Oaks plant. It specialized in personal computers and multiuser systems favored by small businesses, and once was one of the three biggest companies in that field.
But management miscues and the entry of giant IBM into the personal computer business sent the company into a steep slide from which it has never recovered.
Today, 9-year-old Vector occupies much smaller offices in Westlake Village and has fewer than 30 employees. It lost $9.2 million for the fiscal year ended June 30 and $7.6 million the year before. Sales plummeted to $5.1 million from $15.2 million in the 1984 fiscal year.
Deleted From NASDAQ
For the quarter ended Sept. 29, Vector lost $600,000 on sales of $550,000. Its stock, traded over the counter, was deleted Friday from the National Assn. of Securities Dealers Automatic Quotation system because the firm no longer meets NASDAQ's minimum net worth requirement of $375,000.
Vector also said that its president and chief executive, Michael P. Sutherland, will resign as of Tuesday after only four months in the job. In addition, it announced that Bernard Horn, the company's president until April, has resigned as a director and will be replaced on the board by Roger Lee, the firm's executive vice president and chief operating officer.
Sutherland, 42, previously had been executive vice president for engineering with Vector and rejoined the firm as president after a stint as vice president at Corona Data Systems, a computer company started by one of Vector's founders.
In a news release, the company said that it will keep trying to find a merger partner and that discussions will continue with Dual Systems Control, a privately held computer company in Berkeley that had earlier agreed in principle to merge with Vector and temporarily ran the company under a management contract.
Once an Industry Leader
Vector's board "has determined that the best means to proceed with merger or alternative reorganization discussions is through the Chapter 11 proceeding," the company said, adding that it will go on selling its products and providing support to existing users.
Michael Murphy, editor of the California Technology Stock Letter, said Vector was an industry leader when it introduced its first personal computer in August, 1977, around the time that Apple came out with its first computers.
But when IBM introduced its PC in August, 1981, it marked the beginning of the end for Vector. Analysts faulted Vector for failing to develop a computer that was fully compatible with IBM equipment. They also criticized Vector for making a machine with a fixed keyboard when detachable keyboards were becoming the standard.
Murphy said that Vector still could be attractive to potential merger partners because of a tax-loss carry-forward exceeding $10 million and because there are still lots of Vector systems in use that will need to be updated or expanded.
Vector was founded by Robert and Lore Harp in their Westlake Village home in 1976 with a $6,000 investment. The holder of a Stanford doctorate in electrical engineering, Robert Harp provided the technical know-how, while Lore Harp, then a housewife, acquired an MBA and ran the business, which went public in 1981.
Robert Harp left Vector in April, 1982, in a dispute with his wife over how to run the company and a month later founded Corona, a privately held computer equipment company in Thousand Oaks. Lore Harp left Vector at the end of 1983 and later founded a company in San Mateo called Aplex, which planned to make feminine hygiene products. The Harps have since divorced.
Vector's current chairman, Jean Deleage, a venture capitalist with the San Francisco firm of Burr, Egan, Deleage & Co., was unavailable for comment, as were Sutherland and Lee.