Com Systems, a Van Nuys-based long-distance telecommunications services firm, reported a loss of $2.9 million for the first quarter that ended June 30, contrasted with $807,000 in net income a year earlier. Revenue increased 44% to $20.2 million from $14 million.
Rex Licklider, Com System's chief executive, blamed the loss on an increase in fraud in the firm's operator service business. The fraud involved people who obtained authorization codes to enter the company's system and dial international calls, Licklider said. The company has put mechanisms in place to reduce the amount of fraud, such as a new automated calling card validation system, he said. But he added that third-quarter results would also be negatively affected by fraudulent calls made before these mechanisms were implemented.
Licklider also said large up-front costs associated with adding 14,000 public pay phones to its network contributed to the loss.
For the six months that ended in June, Com Systems reported a net loss of $2.1 million, contrasted with net income of $1.3 million in the first half of 1988. Revenue rose 50% to $39.8 million from $26.6 million.