Diceon Electronics Gets More Bad News on Top of Slump in Price and Earnings
Diceon Electronics Inc.’s stock price and earnings have slumped in recent months, and the Irvine computer company got some more bad news last week.
On Monday, the Environmental Protection Agency fined the company $262,000 for failing to comply with a federal law that requires firms to report the nature and amount of toxic chemicals that they release into the air, water or ground.
The fine meted out to Diceon was the largest penalty proposed for 42 U.S. companies that were cited by the EPA last week.
Diceon’s stock showed no unusual activity in response to news of the fine, which was reported in the media but was not disclosed by the company until Friday.
Closed Friday at $9
Diceon stock fell 25 cents to $9 a share on Wednesday, the day after news reports about the fine. The price of the stock, trading over-the-counter, remained fairly stable throughout the rest of the week. It closed Friday at $9.
Diceon stock has traded as high as $20 and as low as $8 a share during the past year.
Diceon, which makes computer circuit boards, was accused by the EPA of missing a July, 1988, deadline to report its estimated release in 1987 of eight toxic chemicals from its plants in Irvine and Chatsworth.
The company is denying the EPA allegations and intends to request an administrative hearing with the agency to contest the charges, said Peter S. Jonas, executive vice president and chief financial officer.
“We don’t think they have a case at all,” Jonas said Friday.
If Diceon loses its appeal, it will be another setback for a company that just reported its first quarterly loss ever.
Loss in Last Quarter
Diceon has a loss of $1.3 million for the quarter ended April 1, contrasted with earnings of $3 million a year earlier. Revenue slipped 18% to $29.5 million.
Even if Diceon ends up paying the fine, Jonas said it should not be a major blow to the company. The company has $35 million in cash on hand and its balance sheet is generally healthy, he said.
Jonas attributed the company’s sagging financial performance to a general slump in the computer industry and weakening prices in its segment of the business.
“Business is slow, but there’s still enough business out there that we’ll be back to profitability soon,” Jonas said. He said the company expects to be profitable by the end of this fiscal year, which ends in October.
In an effort to weather the industry slump, the company has been cutting costs, Jonas said. Diceon’s biggest cost-cutting move came on June 23 when it shut down its circuit-board manufacturing plant in Santa Ana, eliminating 100 jobs.
Jonas said the company’s business was not strong enough to justify continuing the Santa Ana operation. The plant will remain idle until business perks up, he said.
Increasing Holdings
A Los Angeles investment company is continuing to build its stake in Anaheim-based Certron Corp., a maker of magnetic tape.
Louart Corp., Certron’s largest shareholder, purchased 1.1 million common shares of the firm, raising its stake from 32% to slightly more than 35%, according to a recent filing with the Securities and Exchange Commission.
Last year, Louart President Marshall I. Kass initiated something of a power struggle within Certron when he demanded that Edward Gamson be removed as chairman and chief executive, saying the company’s profits weren’t what they ought to be. Gamson resigned in December and was replaced by Kass.
Another Los Angeles investor, William A. Lupien, disclosed that he now owns 5.9% of the stock of Systonetics Inc., a Fullerton developer of computer software.
Lupien is chairman of Mitchum, Jones & Templeton Inc., a Los Angeles investment firm. Lupien paid 1 cent per share for 617,000 common shares of Systonetics, according to a filing with the Securities and Exchange Commission.
Allene Lu, Systonetics’ president and chief executive, described Lupien as a longtime investor in the company. She said she is not aware of any plans by Lupien to acquire a larger stake in the company or to seek control of the software maker.
Wearnes Technology, a Singapore-based company, owns 49% of Systonetics.
