Alpharel Lays Off Officer It Can’t Afford to Pay

In 1986, Alpharel Inc. in Camarillo rolled up annual sales of $14 million and a $1-million profit. Four years, big losses and several executive changes later, the company has become so weak that it can’t afford to keep its chief financial officer and his $91,000 salary.

Alpharel, a developer of computer data-storage systems, said it dismissed William H. Lane, who also was vice president of operations and secretary, on Friday. Lane, who had joined the company a year ago, was succeeded by Alpharel Controller John W. Low.

Robert T. Bruce, who agreed to become chairman and chief executive this spring for no salary, said, “There was just no need for both of us to be here and my expenses were nil; his were substantial. We have some cash, but we certainly don’t have the cash to burn at the rate we have in the past.”

As of March 31, Alpharel’s cash and other assets readily convertible into cash totaled $829,000, down from $9.4 million at the end of 1988.

Bruce, 55, had retired after being chairman of Quadrex Corp., an engineering consulting firm, from 1985 to 1989, and earlier spending 26 years at General Electric Co. He became an Alpharel director in 1988 and said he offered to take the top management posts because “I just didn’t want to be associated with something that went bankrupt.”

He said Lane’s departure is part of his effort to slash Alpharel’s costs to match the steep drop in its sales. “It’s not the best of all worlds, but we’re certainly in a lot better shape than this time last year,” he said.

Alpharel’s products are used with computers to scan documents--up to the size of engineering drawings--and store that data in a computer so it can later be retrieved, transmitted, organized or reprinted. Initially, Alpharel assembled the computer hardware and related software programs to produce its system, but now it focuses mostly on the software.

Founded in 1981, the company ran into serious problems beginning in 1987 and 1988 when its biggest contract, with American Telephone & Telegraph Co., ran out and was not replaced with the same amount of new business.

At the same time, Alpharel was rocked by disputes between its founder, Michael McGovern, and other executives over who would control the company. McGovern remains an Alpharel director and its biggest stockholder with a 14.5% stake, according to Alpharel’s latest proxy material.

The changes in Alpharel’s executive suite have continued recently. In late April, John A. Fasching resigned as president and chief executive, and his responsibilities were assumed by Bruce. Robert J. Shea, executive vice president and head of marketing, left in February. The company laid off 19 of its 59 workers in January.

Alpharel’s sales, which totaled $12.1 million in 1987, dropped to only $4.4 million last year. During those three years, the company rolled up losses totaling $32.5 million. It was more of the same in this year’s first quarter: a $313,000 loss on sales of only $1.1 million, although the loss was much narrower than the $2.2-million first-quarter loss Alpharel had a year earlier.

Meanwhile, the company’s net worth--its assets minus its debts--plunged to $7.4 million as of Dec. 31 from $21.1 million a year earlier. And Alpharel’s stock, which stood at $3 a share at year-end 1987, now trades for about 30 cents.

Alpharel has been looking for outside help. In January it hired an investment banking firm to search for a buyer or major investor that could give Alpharel much-needed cash. But none has surfaced to date.

“We feel we can get there a lot quicker with an infusion of capital,” Bruce said. In the meantime, he said, Alpharel’s work force is more optimistic because some customers that already purchased Alpharel equipment have ordered additional products to upgrade their systems.

Whether Alpharel can secure a significant number of new customers is another matter, but for now, the focus is on Alpharel’s survival. Said Bruce, “I see that we can make it.”