Firm With Storybook Start Has Sad Ending: Vector’s Assets Liquidated

Vector Graphic had a storybook beginning as one of the pioneers in the personal computer industry. Last week, the story reached a grim conclusion when the firm’s bankruptcy attorney announced that Vector Graphic’s remaining assets have been liquidated under Chapter 7 of the U.S. Bankruptcy Code.

Robert and Lore Harp, the company’s co-founders, have long since moved on to start other firms, albeit separately. Their marriage dissolved before Vector Graphic did.

Vector’s bankruptcy attorney, Dennis Cowan, said efforts to arrange a merger failed, leaving no alternative but to liquidate what assets remained to pay off as many of the company’s creditors as possible.

Vector Graphic’s secured creditors received $1.02 million of the $1.6 million they were owed (secured debt is backed by a company’s assets). Unsecured creditors, who included suppliers and Vector’s stockholders, did not receive anything and lost $1.8 million.

Vector Graphic, which had been based in Westlake Village, filed for bankruptcy in December, 1985, after design and production problems and intense competition in the personal computer industry led to big losses. A power struggle for control of the company between the Harps contributed to Vector’s problems.

In 1976, the same year Apple Computer began, Robert and Lore Harp started their company with $6,000 and used their kitchen table as an office.

For a while, Vector flourished. In 1981, the company went public, the same year Vector earned a record $2.6-million profit on $25 million in sales. As Vector’s chief executive, Lore Harp was one of first women to hold a prominent post in the computer industry and made the cover of Inc. magazine.

But in 1981, IBM jumped into the personal computer market and the aftershocks began. The next year, Robert Harp, who as Vector’s chairman oversaw computer design, quit after a dispute with his wife over control of the company.

Like many computer firms, Vector suffered from the dandelion factor: It grew like a weed and ultimately withered like one. By 1985, the company was on a three-year losing steak and had piled up nearly $20 million in losses. Bankruptcy was inescapable.

“It was a very, very frustrating feeling. A lot of stupid things happened,” Lore Harp said of Vector Graphic’s decline. “But I do not go backwards. I look forward. I’m trying to build a new business.”

After leaving Vector Graphic in 1983, Lore Harp moved north. In San Mateo, she started another business called Aplex. Harp, now 43, a former housewife who went back to school to earn an MBA, started marketing Aplex’s first product in December by mail order. It’s called Le Funelle, a disposable paper funnel that enables women to urinate standing up. A package of 20 sells for $7. Harp figured that there would be a market for the item from arthritic patients and women who travel a lot and don’t like dirty public restrooms.

A June article in Business Week helped spur sales, and Harp said she has signed up various drugstore chains to carry her product.

“I have been pushing the stone wheel up the hill and it’s starting to take its own momentum,” she said. Sales have been grown steadily, she said, and hit $130,000 last month.

Her former husband is not one to sit still, either. A month after Robert Harp quit Vector, he started Corona Data Systems, later renamed Cordata Technologies, that sold IBM-compatible personal computers as well as laser printers.

Stewart Alsop, who publishes a computer newsletter called the P.C. Letter, said, “Virtually all of the entrepreneurial people keep starting companies to stay in the computer business. One of the reasons is an almost religious enthusiasm they have about the potential for what computers can do for us.”

Harp, who earned a doctorate in electrical engineering from Stanford, hoped to take Cordata public in 1983. But a flood of other low-cost IBM-compatible computers, so-called clones, slowed Cordata’s momentum. Two years ago, Daewoo Group, the giant South Korean conglomerate, bought a controlling interest in Cordata.

Like Vector Graphic, Cordata would have an unhappy ending for Robert Harp. In February, Daewoo sent in Hyo Bion Im as Cordata’s new chief executive to try and salvage the company. Cordata, Harp conceded, lost $20 million last year.

Operations Moved

But in August, Harp allegedly punched Im, and Harp promptly quit as Cordata’s chairman. Daewoo is now trying to cut costs and is moving Cordata’s operations from Newbury Park to Compton. Harp has said Daewoo’s decision amounted to shutting down the company.

A few weeks after quitting Cordata, Robert Harp reverted to form and started yet another company, this one called Ventek in Westlake Village. “You always have a lot of ideas and may not be able to implement them” except by going into business for yourself, he said.

Ventek will market a computer graphics system, consisting of a circuit board and a monitor that will plug into IBM’s Personal Series 2 desk-top computers, enabling firms that do a lot of in-house printing to turn out high-quality graphic work. The niche Harp is taking aim at is between the lower-priced monochrome graphics system IBM sells and IBM’s more expensive color system.

Alsop, however, has doubts about how successful Ventek will be. IBM, he points out, is now building the graphics system into its personal computers, and selling an add-on system isn’t easy while the market is small.

Meanwhile, the rivalry between Robert and Lore Harp continues. “She’s started another little company,” Harp said of his former wife. “She’s very good in terms of the administration of a company. What she lacks is technical expertise.”

Countered Lore Harp: “Cordata did not give him the satisfaction he was looking for. We’ll see how he will do now.”