Tandon Rebounds With $841,000 Profit in Quarter

Tandon, a Chatsworth computer equipment company that had posted five unprofitable quarters in a row and a loss of $135.4 million in its last fiscal year, reported that it bounced back with earnings of $841,000 during its first quarter ended Dec. 27.

The profit, although slim, marked the end of a series of major write-downs and other charges against earnings taken by the company after much of its inventory of disk drives became outmoded.

“I think it’s fair to say they’ve stopped hemorrhaging,” said James Stone, an analyst with Shearson Lehman Bros. in New York.

Separately, Tandon said it will dismiss 50 to 75 employees today at its Simi Valley plant in connection with the facility’s changeover from disk drive to computer production. About 100 workers will remain at the plant.

Tandon executives are shifting the company from the manufacture of disk drives to the production of IBM-compatible personal computers.

Tandon’s profit, which came on revenue of $47.8 million, compared to a loss of $15.4 million on revenue of $90.7 million in the same quarter the year before. The quarterly earnings included $187,000 that stemmed from tax-loss carry-forwards, which allow a company to deduct previous losses from current taxable income.

But more important, analysts said, was the estimated $1 million to $2 million that Tandon received in royalty payments as a result of reaching settlements last year with Sony and Teac, two Japanese manufacturers that it accused of pirating its disk-drive technology.

Tandon also has accused a third Japanese company, Mitsubishi Electric, of patent infringement, but the International Trade Commission found last week that the company did not steal Tandon’s technology.