Strong Sales in Europe Boost Tandon

Tandon Corp. posted a 32% increase in its second-quarter earnings, reflecting continued sales strength of its personal computers in Europe.

For the second quarter that ended June 30, Tandon earned $6 million, or 10 cents a share, from its continuing operations, compared to $4.6 million, or 8 cents a share, in the year-earlier quarter. For the six-month period, Tandon’s earnings from its continuing operations climbed 40% to $13.2 million, or 22 cents a share, from $9.4 million, or 17 cents a share, a year earlier.

Tandon’s sales from its ongoing businesses grew as well, climbing 40% to $81.1 million, about 75% of that amount in Europe. For the six months, sales rose 37% to $161.5 million.

In March, Tandon completed the sale of virtually all of its disk-drive data-storage business to Western Digital in Irvine, making Tandon almost exclusively a maker of personal computers. In the transaction, Tandon received $49 million in cash, and Western Digital assumed $28 million in Tandon’s bills.

Tandon, which is moving its headquarters this summer from Chatsworth to Moorpark in Ventura County, said profits would have been higher had it not been for the limited supply and high prices of dynamic random access memory chips. The DRAM chips, which serve as the “brains” in each computer, have been in short supply throughout the industry.

Potentially Costly Push

Although its earnings have been strong lately, Tandon is embarking on a crucial, and potentially costly, push into the domestic computer market, the company’s second such effort in two years.

Tandon’s computers have sold well in Europe, primarily West Germany, but have made little impact in the United States.

In 1986, the company, which then was primarily a maker of disk-drive data-storage equipment for computers, introduced its Tandon-brand personal computers with a big advertising push. That effort had little success, however, and Tandon is still a minor player in a domestic market dominated by IBM, Compaq Computer Corp. and Apple Computer.

Ranjit Sitlani, Tandon’s executive vice president for corporate development and strategy, said one of the company’s key strategies this year will be to emphasize sales to so-called value-added resellers, or people who buy computer equipment and resell it to businesses in packages that often include such improvements as custom software.

Tandon also is emphasizing sales of a computer it developed that comes with a removable hard-disk drive, which allows users of the machine to take a disk with them and plug it into compatible machines anywhere in the world.

Tandon’s stock price closed unchanged Monday at $2.31 in over-the-counter trading.