Alpharel May Lose More Than $9 Million in ’87

Alpharel, the struggling Camarillo computer data storage firm, announced Monday it expects to post a loss in excess of $9 million on revenue of about $12 million for its fiscal year ended Dec. 31, 1987.

About $5.4 million of the loss stems from a reserve that the company set up because of excess inventory of equipment and some write-downs of product development costs. The equipment “is obsolete,” said Merrill Lynch analyst Phillip Brannon. Alpharel said it also suffered cost overruns on some contracts.

The company said it expects that its auditors, Price Waterhouse, will qualify their opinion of Alpharel’s financial statements. A qualified auditors’ opinion is usually considered a warning sign. The Alpharel announcement said the auditors, among other things, would raise questions about how much the inventory is worth.

At the root of Alpharel’s problems is a data storage contract with AT&T;, which will expire in September. The contract, which accounted for 91% of Alpharel’s sales in 1986 and 67% in 1987, is not being renewed. The company has had very little success in getting other orders to fill the void.

All of Alpharel’s principal executives have resigned over the last three months and have been replaced by temporary personnel while the board of directors continues its search for permanent replacements.

Meanwhile, founder and former CEO Michael McGovern and a group of investors announced last week that they will launch a proxy battle to regain control of the troubled firm.