Monitor Says It Will Drop Product Line After Losses

Acknowledging that its ambitious expansion into the automated-visual inspection field hasn’t paid off, Monitor Technologies said it would dispose of its two-year-old product line and, as a result, announced a $2.4-million loss for the second quarter ended June 30. Earnings in the first quarter last year totaled only $17,066.

The San Diego-based environmental-monitoring firm, previously known as Monitor Labs, said late Tuesday night that it had established a $2.2-million provision for the sale of its vision-market business. The company, “to avoid unacceptable risk,” will “substantially reduce” its $4-million investment in Monitor Automation, the division that for two years has developed and sold more than 100 automated visual inspection systems.

Monitor was “in over their heads,” according to one analyst who follows the company. The vision-inspection line “required a much larger investment than a company of Monitor’s size could handle.”

Monitor Chairman Kenneth E. Years agreed. “If this business were part of a larger company that has more financial resources than (we do), then we’d continue,” he said in an interview.

Monitor entered the field in early 1985 when it purchased Image Data Systems in Ann Arbor, Mich. At the time, Monitor management tried to diversify beyond its traditional air pollution monitoring because the industry was growing at only a 5% annual rate.

Company executives believed that the vision-inspection industry would expand at a 25% rate and predicted that its new division would generate more than $20 million in revenues in the next few years.

Revenues for the second quarter reached $2.6 million, up only slightly from the prior year’s comparable $2.5 million.

For the six months, Monitor reported a net loss of nearly $2.5 million, compared to earnings of $55,329 a year ago. First-half revenues totaled $5.4 million, up nearly 19%.

Monitor said that its air pollution division is meeting its 1986 financial plan.

The stock market reacted negatively to the announced loss, with Monitor closing Wednesday at 2 bid, down from 3 1/2 on Tuesday.