Tandon Posts a Loss Despite 3% Sales Gain

Thanks to $28 million in year-end writeoffs, Tandon Corp. on Wednesday reported a $45.3-million loss for its fourth quarter ended Sept. 28 despite 3% higher sales of $56.4 million.

As a result, the Chatsworth-based computer concern finished the year with a net loss of $62.8 million. Revenue was off 20% to $214.1 million.

“It’s worse than I expected,” said Steven Ossad, who follows Tandon for L. F. Rothschild, Unterberg, Towbin in New York and who had anticipated a smaller loss. “It’s terrible.”

In the year-ago quarter, Tandon lost $85.1 million, and for the preceding fiscal year, the loss was $135.4 million. Per share, the quarterly loss was 89 cents versus $1.67 a year ago, and for the year it was $1.24 versus $2.66.

Tandon said fourth-quarter earnings were hurt by $16 million in inventory writedowns and an additional $12 million in charges, such as for lease terminations, which are related to shrinking the company to fit its lower level of sales.

In the year-ago quarter, the company said, year-end adjustments totaled $90 million, including $73 million for inventory.

Earnings in the most recent quarter were also affected by start-up costs from the introduction of Tandon’s personal computer line, but the company said the new products have helped boost first-quarter sales beyond previous expectations.

As part of its consolidation plans, Tandon eventually intends to move its headquarters to Moorpark and may also close its Moorpark computer assembling facility in favor of overseas operations, said Chief Financial Officer Denis Trafecanty.

He said that more layoffs are possible and that the company needs additional financing to support its strong personal computer sales.

Once primarily a maker of computer disk drives, Tandon now gets about half its revenue from drives and half from computers, and that proportion will continue to shift toward computers, Trafecanty said.