Kaypro Posts $7.1-Million Loss in 4th Quarter; Sales Plunge

By CHRIS KRAUL

Dec. 3, 1988 12 AM PT

The financial blood-letting continued at Kaypro Corp., with the battered Solana Beach-based personal computer manufacturer reporting a $7.1-million loss for the fourth quarter ended Sept. 2.

The loss, which compared to a $10.9 million loss in the same quarter last year, came on sales of $13.3 million, a sharp reduction from the $20.5 million in sales reported for the year-before period.

Kaypro blamed the loss on reduced unit sales, a drop in customized computer sales and lower margins caused by the higher cost of dynamic random access memory (DRAM) chips. The company also disclosed in a filing with federal regulators that it made a $1.1-million provision, a charge on earnings, in the fourth quarter “as a result of product decisions rendering various component parts obsolete.”

For the full year ended Sept. 2, Kaypro lost $11.5 million on sales of $72.2 million, compared to a loss of $9.6 million on reduced sales of $105.6 million for the previous fiscal year.

The troubled computer company also disclosed in the filing that it was forced to borrow $500,000 more in the fourth quarter from chairman Andrew Kay for working capital, bringing the total borrowed from Kay over the last year to $2.8 million. Kaypro’s steady losses over the last two years have reduced its shareholder equity to a tenuous $3.2 million.

Kaypro’s 11-acre manufacturing and executive facility in Solana Beach, which is owned by Andrew Kay and leased to the company, is in the process of being sold, spokesman David Lawson said. Kay will lend part of the proceeds to Kaypro for working capital and to help refinance the company’s overdue $8-million debt to Commonwealth Financial Corp. of Walnut Creek.

To reduce costs, Kaypro laid off 35 workers in September, lowering the payroll to about 300 workers, Lawson said Friday. The total contrasts with Kaypro’s 526 employees as of Oct. 1, 1987. Kaypro President David Kay, son of chairman Andrew Kay, resigned in September. No more layoffs are now planned, Lawson said.

Technology and the Internet Business

Chris Kraul

Chris Kraul covered South America for the Los Angeles Times from his base in Bogota, Colombia. He joined the paper in 1987 and was business editor of the San Diego edition until it closed in 1992. He then began covering the border and Mexican economies until his assignment to The Times’ Mexico City bureau in 2001. He reopened the paper’s Bogota bureau in 2006. He has also covered the wars in Afghanistan and Iraq. He is a graduate of the University of South Florida and also has been a reporter at the San Jose Mercury News, San Diego Union-Tribune and the San Diego Business Journal.

Kaypro Posts $7.1-Million Loss in 4th Quarter; Sales Plunge

More From the Los Angeles Times