The other shoe dropped with a resounding thud Tuesday as beleaguered Comarco Inc. said it expects to post a $9.5-million net loss for its fiscal second quarter.
The announcement came just 12 days after a corporate shake-up that involved the ousters of the Anaheim defense contractor's chairman, president and chief executive, Glenn D. Buell, and chief financial officer, James C. Quibodeaux.
Several stock analysts said at the time that the housecleaning presaged bad news for the company's fiscal 1988 second period, which ended July 31.
"Whoops, there goes the second quarter," Robert Hanisee of Seidler Amdec Securities Inc. in Los Angeles said after hearing that Buell had been replaced.
But Hanisee said Tuesday that the size of the loss "blows me away. . . . I thought it might be $3 million to $5 million."
Comarco Vice President Don Bailey said Tuesday that the $9.5-million net loss--$10.5 million before an offsetting tax credit is applied--will come largely from write-downs of so-called intangible assets of several recent acquisitions and new divisions within the company. He said those assets were largely good will--the value of a company's name, reputation and customer base--and "some" product development costs.
But Hanisee said Comarco's new chief financial officer, Peter McKane, told him the company also wrote off old receivables and facilities leases. The write-offs, he said, all involved lines of business developed or acquired by Comarco in the last two years or so.
"It is the result of bad acquisitions," Hanisee said, adding that he believes that the core company, which provides defense-related computer systems and services, is in good shape and posted an operating profit of about $1.5 million for the first half.
Bailey said Comarco in the last week has sold two marginal divisions, one that trained government employees and military personnel in anti-terrorism and counter-terrorism techniques and one involved in computerizing engineering drawings.
Comarco's new management team, Hanisee said, appears to have identified and addressed its problem areas. The company, he said, "should be profitable in the second half" and could even pay down some of its debt.
No Increase in Debt
Short-term debt currently stands at about $14 million, Bailey said, but Comarco is renegotiating its line of credit with its bankers in an effort to convert some of the short-term borrowings to long-term debt.
Walter V. Sterling, the longtime Comarco director who was tabbed to fill in for the ousted chairman while the company hunts for a permanent replacement, said he has assured the company's bankers that the quarterly loss will not increase Comarco's debt level.
Additionally, he said, "with the reorganizations, divestitures and accounting adjustments being taken at this time, the company has established a sound basis for the future. . . . We are committed to returning the company's focus to its traditional successful business areas."
He said the final results for the second quarter should be released early next month.
Tuesday's announcement was made after the close of stock trading. Comarco's stock closed at $6.50 Tuesday, up 12.5 cents, in national over-the-counter trading. The stock was trading at about $8 a month ago.