General Automation Inc., which recently experienced a management shake-up and annual losses of $11 million, has installed a new president and chief executive and is pursuing what company officials are calling a “business combination” with another Orange County computer firm.
W. Norris Agee, 50, became the Anaheim-based computer manufacturer’s new chief at 5:30 p.m. Monday, replacing Michael J. O’Donnell, 33, who had held the top jobs for only two months.
Joseph Allen, General Automation’s spokesman, refused to comment on O’Donnell’s brief tenure.
“The company has no comment other than that we wish him well,” Allen said in a telephone interview. “He has another position at another place in the industry which I am not at liberty to disclose.”
Agee, however, said O’Donnell’s departure came about as General Automation began negotiating with WesPac Technologies Corp., an Irvine manufacturer and supplier of “on-line transaction processing systems,” computers such as those used in airline reservation systems and automatic teller machines.
Agee is the former owner of two local computer firms, SyFA Data Systems Corp. and SyFA Data Systems Ltd. He bought the two companies from Computer Automation Corp. of Irvine in 1985, he said, and then sold them to Wespac in 1987.
“Then, as a consultant to Wespac, I began looking for opportunities to . . . build Wespac,” Agee said. “The General Automation opportunity appeared. I made them a proposal. (O’Donnell’s departure) was a result of a disagreement between Mr. O’Donnell and Mr. Giles (General Automation chairman Alexander W. Giles) over the substance of my proposal.”
Agee will also take over O’Donnell’s spot on the company’s board of directors.
General Automation is just slightly more open about the negotiations than it is about the change in command. Allen said the “shape of the relationship” between Wespac and General Automation “hasn’t been determined yet.”
Allen said there are several possible outcomes to the discussions between the two companies. However, according to WesPac Chairman Arnold E. Margolis only a merger or acquisition are under consideration.
The two companies began negotiating in September, Allen said. Some sort of agreement should be reached within 90 days, Agee said.
A relationship with WesPac would benefit General Automation in several ways, Allen said. First, he said, it would open up a credit line of $2 million. Secondly, WesPac brings to the company a U.S. network of computer field service offices, which General Automation lacks.
“It would be possible for the companies to joint-venture on service, just as an example,” Allen said. “Possibly the two could share and jointly own manufacturing and test facilities.”
And finally, it would appease General Automation’s auditors, who have “expressed concern about the company’s financial viability,” Chairman Giles said in a written statement. Auditors have “told the company that completion of these transactions would be a major step toward satisfying these concerns.”
In August, General Automation named O’Donnell to the posts of president and chief executive and Giles to the post of chairman. Although the management changes came at a time of financial troubles for the computer maker, company officials said then that recent losses were not a major factor in the decision.
On Oct. 4, the company announced that it lost $11 million for its fiscal 1988 ended June 30, including an $8.9-million loss in the fourth quarter. The company disclosed at the time that it is having difficulties generating enough cash from operations to meet expenses.
For WesPac, a relationship with troubled General Automation could offer opportunities for cost-cutting and for strengthening the company’s presence in Europe, Margolis said.
“We can combine the two overheads and reduce costs both in the U.S. and the European markets,” Margolis said, adding that it is too early to discuss layoffs or plant closings. “They have a good presence in Europe, especially in Germany, Italy and Spain. We’re not as strong as they are there. There are a lot of pluses in the European market.”
Neither Giles nor O’Donnell could be reached for comment.