Computer Automation to Post Loss, Blames Military Program Snafus
Computer Automation Inc. said it will have a loss of more than $1 million for its fourth quarter ended June 30, blaming the loss on less-than-anticipated revenue from two military-related programs.
As a result of the loss, the Irvine-based manufacturer of automatic test equipment and computer systems said it will also report a loss for the full fiscal year.
In response to Thursday’s announcement, Computer Automation’s stock plunged 23.4% to $4.50, down $1.375. The stock was the biggest percentage loser on the computerized over-the-counter market trading system Thursday.
Computer Automation’s stock traded above $12 per share as recently as April. The stock soared in April on speculation that a licensing agreement the company signed with International Business Machines Corp. would produce substantial royalty payments.
Last year, IBM obtained a patent license from Computer Automation after discovering that technology developed for its PS/2 personal computer line was similar to an existing Computer Automation patent.
Computer Automation said in April that it believes companies seeking to produce legal “clones” of the IBM machines will also have to pay royalties to the Irvine firm. At the time, some investment analysts predicted that many personal computer makers would soon follow IBM’s lead. But so far, Computer Automation has announced agreements with only two foreign computer makers.
“The (patent royalty) situation is very muddy right now,” said Brian G. Swift, a San Francisco investment analyst who last spring estimated that Computer Automation could receive $3 million a year in royalties. “Right now, it doesn’t look very good.”
Meanwhile, Computer Automation said its fourth-quarter loss arose from “revenue shortfalls” involving two Air Force programs. One program was rescheduled by the customer. The other program has been delayed as a result of a bid protest filed by a competing company, Computer Automation said.
Computer Automation expects to report its final revenue and earnings for the fourth quarter and fiscal year in several weeks. In a statement Thursday, the company made no mention of its expected revenue for the quarter or year.
For the nine months ended in March, Computer Automation reported net income of $743,000 on revenue of $17.3 million.
