CCT Corp. Reports $13-Million Loss in Wake of Reduced Sales
Owing to a depressed market for its computer disk drive components and to costs related to layoffs and consolidation of operations, Computer & Communications Technology Corp. reported a $13.9-million loss for the fourth quarter ended Dec. 31.
The loss, which came on sharply reduced sales of $18.9 million, brought the company’s full-year loss to $15.9 million on 1988 sales of $107.8 million.
In an interview, CCT Chairman E. T. Bahre said the company has been hurt by a slowdown in demand for recording heads, a computer component made by CCT that is used in disk drives, a data storage device. The drop in CCT’s fourth-quarter revenue from $31 million during third quarter of 1988 reflects how quickly and dramatically the slowdown hit, Bahre said.
“Disk drive manufacturers put on a lot of (manufacturing) capacity and stockpiled a lot of inventory last year” anticipating a level of demand that did not materialize, Bahre said. As a result, there has been a “radical reduction in (supply) requirements from component suppliers such as CCT” from disk drive manufacturers.
As the company had previously confirmed, CCT is still making drastic cutbacks in payroll in a bid to cut costs. Bahre said CCT employment will soon fall to about 2,500 jobs, a reduction of more than 37% from the about 4,000 workers CCT employed during its peak in 1988.
Hit particularly hard by the layoffs have been CCT’s plants in Tijuana and Puerto Rico, as the company has moved much of the manufacturing capacity from those two locations to South Korea, Bahre said. Neither location will be shut entirely, Bahre said. Moreover, CCT has reduced its administrative staff in San Diego in recent months by 30%, to 175 workers, he said.
Bahre and other top executives recently took a salary cut pending the company’s return to profitability, but Bahre declined to say how deep a cut.
In the previous year’s fourth quarter, CCT made a profit of $1 million on sales of $24.3 million. For all of 1987, CCT’s profit was $6.4 million on revenue of $98.8 million. CCT shares closed up $.125 a share at $2.375 in over-the-counter trading Thursday.
