CMS Expects to Post Fourth-Quarter Loss

CMS Enhancements Inc. said Wednesday that it expects to post a fourth-quarter loss and lower earnings for its fiscal year ended June 30, attributing the loss to $4.5 million in expenses partly related to excessive inventories.

CMS, a maker of computer storage products and related equipment, said revenue for the year will be about 7% lower than the year-ago figure of $200.4 million. The company said the lower sales result from intense competition in the computer components industry.

Mark Matheson, an analyst for Cruttenden & Co., a Newport Beach investment bank, said CMS is a small player in the market for computer tape backup subsystems and is being hurt by competition from larger companies such as Archive Corp. in Costa Mesa.

CMS spokesman Bill Mackey said the company has more inventory at its plant in Singapore than it will be able to sell. He said the company will also take a special charge for inventories returned to suppliers for repair.

For the nine months ended March 31, CMS reported a 40% drop in earnings to $2.2 million from $3.6 million, while revenue dipped 2% to $154.2 million from $157.6 million.

The company attributed its weaker performance in the third quarter to higher-than-expected expenses at its manufacturing plant in Singapore and costs related to acquiring its service and repair business.

The company expects to release its audited results in August.

CMS stock closed Wednesday at an all-time low of $4.375 per share, down 12.5 cents in trading on the New York Stock Exchange.