Cipher Data Says It Expects to See Lower Net Income
Cipher Data Products Inc. said Tuesday it expects to report lower net income on higher revenues for the fiscal year ended June 30.
The company blaming the cash drain of its money-losing Optimem optical disk drive subsidiary for causing the dip.
Cipher Data’s chief financial officer, Thomas Anderson, said Optimem’s anticipated after-tax loss of $4.3 million, or $.30 cents per share, for 1987 will drag Cipher Data’s net income to below last year’s $7.2 million or $.50 per share. Anderson would not say specifically how much less 1987’s net income will be, compared with last year’s.
The computer peripheral manufacturer’s 1987 revenues should exceed $180 million, Anderson said, higher than last year’s $163 million. Optimem’s revenues will be $9 million to $10 million, a company spokesman said, less than the $12 million Cipher Data said it hoped for when it acquired the Sunnyvale-based operation from Xerox for $6.3 million in July 1986.
Optimem has been hit by high research and development costs in its efforts to develop an erasable, or re-recordable, optical disk drive product, and also by slower-than-expected market acceptance of write-once optical disk drive products already available, President Gary Liebl said recently.
Also late Tuesday, Cipher Data announced it has agreed to sell its vacant 168,000-square-foot manufacturing plant in Garden Grove to ALPS Electric USA for $10 million.
The sale price is about equal to the plant’s book value, so Cipher Data will not post a significant loss or gain on the sale, Anderson said.
Closed Plant Last Year
Cipher Data closed the Garden Grove plant late last year as a cost-cutting measure, laying off 600 of its 700 employees. The remaining employees were transferred to Cipher’s San Diego assembly facility. Cipher Data subsequently moved the Garden Grove plant’s manufacturing capacity to an existing facility in Singapore.
Cipher Data’s total employment has dropped to about 1,900, from 2,500 a year ago, Anderson said.
ALPS, a unit of a Japan-based manufacturer of computer and electronics components, already has sizable manufacturing operations nearby in Garden Grove and is in an expansion mode, Anderson said.
Cipher Data also said in its statement Tuesday that fourth-quarter 1987 net income and sales will both be under the levels reported for the third quarter ended March 31, when Cipher Data had net income of $1.3 million on sales of $45.9 million. Audited year-end financial results will be released in August, Anderson said.
