Cost Cutting, PC Sales Enhance Tandon’s Profit

Tandon, citing cost cutting and increased sales of its personal computers and disk drives, said it earned $1 million in its first quarter ended Dec. 28, up 19.6% from $841,000 a year earlier. The Chatsworth company said sales rose 60% to $76.4 million, the highest quarterly revenue in two years, up from $47.8 million a year earlier.

The company had posted a $62.8-million loss in the fiscal year ended Sept. 28, on a 20% decline in revenue.

“It was a positive surprise. I’m used to negative surprises” with Tandon, said Steven L. Ossad, who follows the company for L. F. Rothschild, Unterberg Towbin in New York.

During the past year, Tandon has shifted its emphasis from making disk drives, to making IBM-compatible personal computers. The company also has cut its work force by more than one-third to 2,100 worldwide.

Tandon said personal computers made up about 60% of the quarterly sales, the first time the machines have accounted for more than half of the company’s business. Tandon said sales of its computers have strengthened during the past few months, and the company needs additional working capital to step up production to meet customer demand.