Micro D Posts 1st Annual Loss in Its 6-Year History

Just seven months after its founders left the company, Micro D reported the first annual loss and the largest-ever quarterly loss in its six-year history.

The Santa Ana-based distributor of microcomputer equipment posted a net loss of $3.1 million for 1985, compared to a net profit of $431,000 during fiscal 1984. Revenue for the year was up just 5% to $119.8 million from $113.7 million in 1984.

For the fourth quarter, the company reported a net loss of $1.8 million, compared to a net loss of $733,000 during the year-earlier period. It marks the fifth consecutive quarter that Micro D has posted losses. Net revenue for the fourth quarter, however, was up 42% to $44.6 million from $31.4 million in the year-ago quarter.

But the sharp jump in fourth-quarter sales was not enough to overcome massive write-downs of nearly $1.6 million, including a $600,000 loss the company took on outdated inventory it expects to sell at a discount and a $350,000 loss taken on overdue payments from customers who have gone bankrupt, a direct result of the prolonged slump in the personal computer industry.

Linwood A. Lacy Jr., Micro D chairman and chief executive, blamed the poor showing on “my decision to strengthen our balance sheet” with the large write-downs. He projected that the company will be profitable this year, “beginning in the first quarter.”