Alpha Micro Has $7.9-Million Loss, Lays Off 55
Alpha Microsystems Inc., a Santa Ana computer maker struggling to regain momentum after a bitter internal power struggle, laid off 55 workers Friday and revealed that it lost a record $7.9 million in its 1987 fiscal year.
The loss for the year ended Feb. 22 includes $7 million worth of red ink accumulated in the final quarter, an amount that covers unspecified but “significant” write-downs of excess and obsolete computer parts and a $1.1-million reserve for litigation settlements.
Also included in the quarter’s loss are unspecified costs stemming from the power struggle last year that resulted in the ousting of the company’s top officers by its two founders.
Sales, too, have been lagging. For the 1987 fiscal year, revenues were $47 million, about 2% below the $48.1 million recorded last year. In the final quarter, sales were $12.1 million, about 6% higher than the $11.4 million in the previous year.
With the latest losses, Alpha Micro has lost a total of nearly $11.5 million since 1985. In its fiscal 1986, the company lost $3.5 million, including $1.5 million in the final quarter.
74 Laid Off
Friday’s layoffs, the largest in the company’s 10-year history, bring to 74 the number of employees terminated since founders Robert Hitchcock and Richard Wilcox resumed control of the company last December. Alpha Micro now has 293 employees.
“As bad as the news is, we believe it’s a good step in the right direction,” company chairman and president Hitchcock said Friday of the write-offs and layoffs. “We are trying to restructure the company to make it profitable in the future.”
Still, Hitchcock indicated that profits are not immediately on the horizon. Costs associated with Friday’s layoffs are expected to have a strong negative influence on the company’s fiscal 1988 first quarter, which ends Sunday.
The company’s lackluster sales and string of quarterly losses were the reasons behind the moves late last year by Hitchcock and Wilcox to oust Richard Cortese, whom they had hired as Alpha Micro president in 1982.
Hitchcock said Friday that under Cortese’s management, the company wandered away from its original strategy of simply providing business computer systems for its customers.
To compete with other suppliers, Hitchcock said, Alpha Micro had begun to sell private label personal computers and printers, a move that apparently backfired when the models the company selected became obsolete and prices for competing brands dropped.
Hitchcock said that the company will no longer sell the printers and personal computers and that a substantial portion of last year’s write-offs were made on the inventory of those products.
“We’re going to focus on a more narrow area now. We’re going to stick to what we do best, which is provide the core computer system. And we’re going to work to improve those systems,” Hitchcock said.
