Micropolis’ Stock Drops on Rumors
Micropolis’ stock fell $2.125 a share Friday on heavy volume, which traders and analysts blamed on rumors that the Chatsworth company might post disappointing first-quarter earnings and that it might have production problems with a new disk-drive data storage product.
Micropolis’ stock dropped to $23.625 a share on 1.48 million shares traded. Overall, the stock market dropped sharply Friday, with the Dow Jones industrial index falling 44.92 points to 1,978.95.
Dundas I. Flaherty, the computer equipment company’s chief financial officer, said Micropolis’ revenue in the first quarter ended April 1 will be flat compared to fourth-quarter revenue and profit will be lower than it was in that quarter. Both revenue and earnings, however, should be up from a year earlier.
In the fourth quarter ended Dec. 25, 1987, Micropolis earned $7.2 million on sales of $80.4 million. In the first quarter ended March 27, 1987, the company earned $6.2 million on sales of $61.8 million.
Micropolis makes high-speed, high-capacity disk drives used to store and retrieve data in so-called workstation computers often used by engineers and scientists. Its customers include Sun Microsystems and AT&T.;
The market rumors Friday involved suggestions that the company is having problems making its newest major product, the 380-megabyte disk drive, which it began shipping last year.
John T. Rossi, a former disk-drive executive who follows Micropolis from the San Francisco office of Alex. Brown & Sons, said he has talked to executives at three of Micropolis’ suppliers, who indicated that Micropolis plans to step up production.
Flaherty said Micropolis only experienced manufacturing problems typically encountered in making new high-technology products, but conceded that Micropolis had hoped to be making more of the new drives by now.
He said sales of the drive will probably range from $12 million to $13 million in the first quarter, but might have reached $20 million had Micropolis been able to make more of the product.
