President, CEO of Digitext Steps Aside in Wake of Product Delay

Times Staff Writer

Digitext announced Monday that its president and chief executive, Lawrence W. Melquiond, has resigned from those posts after the company discovered problems that delayed full-scale shipments of its main product, a new computer keyboard.

The production delay at the Thousand Oaks-based firm will result in a loss of about $750,000 for the second quarter ended Sept. 30.

After the announcement, Digitext’s stock in over-the-counter trading tumbled 25% to $3.75 a share, down $1.25 from Friday. The stock had been at $9 a share in mid-July.


The 4-year-old company is developing a keyboard, called the Digitext-ST, that is intended to help court reporters, government officials and others store and retrieve text from a computer at a much faster rate than with conventional means. Digitext’s machine costs about $14,500.

Melquiond, 44, will become Digitext’s executive vice president for sales and marketing. Until a new president is named, a management committee headed by Monty Kaufman--who became Digitext’s chairman only 2 1/2 months ago--will run the day-to-day operations of the company.

In a telephone interview from his New York office, Kaufman, 34, said the management changes came during a board meeting last Thursday. He said Melquiond’s resignation from the presidency was voluntary.

However, Kaufman said “there was disappointment” among the board members “with the results of the manufacturing effort” under Melquiond. “Larry and the board recognized that at this point, the company needs a strong manufacturing expert so we can ensure the quality of the product. Larry’s expertise is truly in marketing and he will serve the company in that role.”

$8.5 Million in Losses

Digitext, still in the product-development stage, has reported meager revenue thus far and has yet to make a profit. The company lost $8.5 million between its inception and March 31 of this year. But, until recently, Digitext appeared ready to start high-volume shipments of its new machine.

The company reached an agreement with computer giant Wang Laboratories to be the exclusive marketer of its keyboard. Control Data Institutes, a training arm of computer maker Control Data, agreed to buy the machines for use in teaching the Digitext system.


However, some test models of the machines suffered “mechanical malfunctions in the hardware components, primarily in the keyboard,” that delayed Wang’s plans to begin selling the product, Kaufman said in a statement.

Wang’s action prompted Control Data Institutes to suspend purchases of Digitext’s machines. The training school so far has spent $345,000 purchasing the machines, about half what it was expected to spend by this time.

Digitext reported that it subsequently has sent production-line versions of the keyboard to Wang for testing. Once the machine is approved, Digitext expects Wang to buy $800,000 worth of the machines under terms of their agreement.

Melquiond, who remains on Digitext’s board of directors, joined Digitext in October, 1984, as national sales manager. He has been president since June, 1985, and chief executive since May, 1986.

Melquiond could not be reached for comment.