Once a Comer in PCs, Kaypro Files Under Chapter 11
Kaypro Corp., once synonymous with portable personal computers but hobbled in recent years by a long string of misfortunes, has filed for protection under Chapter 11 of the federal bankruptcy code.
The Solana Beach-based firm, which will continue to operate and sell computers, is a victim of highly competitive market conditions, faulty components that led to costly warranty repairs and ongoing management problems. Its bankruptcy filing comes only two weeks after it named management consultant Roy Y. Salisbury as chief executive.
Buoyed by its once-popular portable Kaypro personal computer, the firm’s sales skyrocketed to $119.6 million in 1984 from $5.5 million in 1982. But it has since been buffeted severely. Last month, it announced a 1989 loss of $19.4 million on sales of $21.8 million, losses that brought its accumulated deficit in recent years to $44.1 million.
Kaypro’s largest unsecured creditor is founder and Chairman Andrew Kay, who is owed $7.3 million, according to a preliminary petition filed Thursday in U.S. Bankruptcy Court in San Diego. As financial problems mounted and banks steered clear of the company, Kay lent Kaypro cash to pay some of its bills.
Sales of the Kaypro portable computer, which was based on the now-outdated CP/M operating system, began to erode in the mid-1980s with the rising dominance of the DOS operating system incorporated in International Business Machines’ personal computers and their clones. Kaypro replaced the old portable with new models using the DOS system that sold well for a while but failed to make a profit.
The company is a shadow of its former self, with payroll having been whittled to 44 employees from 526 as of October, 1987. The company is also considering subleasing its Stevens Avenue plant and office facility in Solana Beach. Kaypro also said it is considering having its computers made offshore in the Netherlands.
New chief Salisbury declined to single out one factor that brought the company to its current straits. Over the years, the company has cited inventory writedowns and the high price of dynamic random access memory (DRAM) chips for its problems.
In its bankruptcy court petition, Kaypro gave only a partial listing of liabilities and assets. The most complete listing available is balance sheet data filed with Kaypro’s fiscal 1989 earnings statement that shows assets of $5.6 million and liabilities of $21.8 million, said Charles Clark, a consultant for Kaypro.
