Wavetek Has $7-Million Loss in Its 3rd Quarter
Wavetek, the troubled San Diego test- and measurement-equipment manufacturer, reported a $7-million third-quarter loss Thursday, one week after replacing its president.
The losses suggested that the Wavetek board’s decision July 11 to replace John Battin was prompted by Wavetek’s poor financial performance, although neither Wavetek nor Battin has said what brought the management change about. New Wavetek President C. Fredrick Sehnert said that “a change in management is usually brought on by a number of factors.”
In a bid to cut overhead, Wavetek also disclosed that it laid off 64 workers over the quarter, about 22 of them employed by Wavetek’s San Diego operations. Total Wavetek payroll now stands at 1,159 employees.
The company also said its $7-million loss on sales of $20.1 million, which contrasts with a profit of $1.1 million on sales of $20.9 million over the comparable quarter last year, was caused by a number of factors.
First, the loss reflects a $2.4-million payment by the company toward settlement of a shareholder lawsuit connected to Wavetek’s $30-million public stock offering in 1983. The suit alleged that Wavetek artificially inflated its stock price by making overly optimistic financial projections before the offering.
‘Obsolete’ Inventory
The loss also reflects a $1.9-million write-off for “obsolete and excess inventory,” mainly microwave test equipment, that Wavetek now doubts it can sell. Wavetek also wrote off a $1.7-million investment in a project to develop an oscillator product that “never made it to the production line,” Sehnert said.
Other costs and expenses include the company’s decision to write off as uncollectable a note totaling about $700,000 that the company took back to finance the 1985 sale of its Rockleigh, N.J. division. The company also set aside or paid out a similar amount to cover costs related to the termination of employees, including Battin.
For the nine months ended July 2, Wavetek posted a loss of $5.3 million on sales of $63.9 million, contrasted with a profit of $2.5 million on sales of $58.6 million over the same three quarters last year.
Sehnert said Thursday that Wavetek expects to report a loss for the fiscal year.
Wavetek stock closed down $.625, at $6.125 a share, in Thursday trading over the counter.
