MAI Basic Four Posts $46.2-Million Loss for 3rd Quarter
Showing the effects of its unsuccessful hostile bid for Prime Computer, MAI Basic Four Inc. on Monday reported a $46.2-million loss and a 23% drop in sales for the quarter ended June 30.
The Tustin computer maker said the loss was largely the result of the $25 million it spent trying to acquire Prime and $14.2 million in expenses associated with a recently announced corporate reorganization and cost-cutting program.
MAI said sales for its fiscal third quarter dipped to $86 million, down from the $112.3 million it reported for the same period last year. Excluding takeover and restructuring costs, the company had an operating loss of $5.5 million; it had an operating in-come of $18.1 million for the period a year ago.
MAI said its results were also hurt by a slump in the mid-range computer market, which is also having an adverse effect on other companies such as Wang Laboratories and Digital Equipment Corp.
“The past eight months have been extremely difficult for MAI, which has been involved in an expensive, distracting and now discontinued effort to acquire Prime,” MAI President William Weksel said in a statement.
MAI lost its hard-fought bid to acquire Prime when the Natick, Mass., computer company accepted a $1.2-billion friendly buyout offer from J.H. Whitney & Co., a New York venture capital firm.
The takeover effort not only cost MAI $25 million in legal, consulting and administrative expenses, it also exacted a price in lost customers.
The company said Monday that the revenue decline for the quarter “is primarily the result of lost business and deferred buying decisions related to the uncertainty of the company’s tender offer for Prime.” MAI said the computer industry slowdown and unfavorable foreign currency exchange rates also contributed to the reduction in sales.
MAI said on Aug. 11 that it expected to report a “significant loss” for the third quarter and also a loss for the fourth quarter, which ends in September. The company said Monday that it expects to show profitable results for the first quarter of fiscal 1990.
The company recently announced a sweeping reorganization program aimed at cutting its annual expenses by $30 million. It plans to consolidate its U.S. and foreign sales and computer repair offices and to lay off 400 employees, or about 10% of its work force worldwide. Company officials have said the reorganization was not prompted by the costs of the Prime takeover bid.
For the latest nine months, MAI reported a loss of $38.3 million, which contrasted with earnings of $18.7 million for the period in 1988. Revenue dipped 1.5% to $298.4 million, down from $303 million a year ago.
