Sym-Tek Cuts Staff; Quarterly Loss Cited

Sym-Tek Systems Inc. on Tuesday blamed weakness in the semiconductor industry and its continued new product research and development costs for a 15% staff reduction and a $390,000 net loss for the first quarter ended June 30.

Revenue dipped 18% to $4.7 million for the first quarter ended June 30. The company reported a $286,000 net profit during the first quarter of 1986.

The San Diego-based manufacturer of test equipment for the semiconductor industry instituted the labor force reduction to “return to profitability as quickly as possible,” according to President Ray Twigg.

Sym-Tek also announced that it will try to bolster its capital base by offering a private placement of up to $3 million in debentures to a group of institutional investors. Sym-Tek last month concluded the sale of $3 million in convertible subordinated debentures to an institutional investor.

Analysis of Strategy

The capital raised by the completed and planned debenture offerings “is probably needed in order to keep the business going and keep the research and development going,” according to one industry analyst, who added that Sym-Tek has been absorbing extensive research and development costs associated with a planned product line.

Twigg linked the loss and layoffs to “continued weakness in the demand for capital equipment in the semiconductor industry and production difficulties associated with certain new products recently developed by the company.”

Sym-Tek’s bookings rose by 16% to $4.3 million compared with the previous quarter ended March 31 but “it is premature to conclude that there is a positive, sustainable trend developing for the purchase of capital equipment,” Twigg said.

Sym-Tek “has not gotten the orders that they expected, and production (of a new automatic handling machine) is not yet complete, or at least not yet perfected,” according to James A. Jeffs, a Los Angeles-based industry analyst with Seidler Amdec Securities.

Sym-Tek’s testing equipment business “is still depressed, but I’d have guessed that they’d have returned to levels at which they’d remain profitable,” Jeffs said. However, Jeffs added that Sym-Tek “remains in a good position in the marketplace” because of its existing semiconductor industry products.

Sym-Tek, which produces testing devices that are used by the semiconductor industry, has spent more than $5 million during the past 18 months to build a fully automated semiconductor testing device.

Twigg said that R&D; effort is nearing completion, and that “we are able to consolidate our two engineering departments and, along with other reductions, reduce our labor force by about 15%.”