Supercomputing Solutions, a supercomputer manufacturer that last summer laid off half its 60-member staff in a last-ditch attempt to cut operating costs, on Friday began to close down its remaining operations in San Diego.
The company had laid off about 15 additional people and cut all nonessential operating costs during recent months, Chief Executive Allan D. Simon said Friday. But the company has exhausted its operating capital and is also unable to make interest payments on $1.3 million in notes, Simon said.
Industry analysts earlier had linked the 4-year-old company’s financial woes to high research and development costs associated with its primary product, a supercomputer that costs between $400,000 and $1.8 million, depending upon added features.
“Cash flow problems are very typical for this kind of company,” said Chris Willard, a senior industry analyst at Dataquest Inc., a San Jose-based high-technology market research company. “They spend all their money bringing a product to market, then they have no money to market it.”
Supercomputing Solutions had sold only one of its supercomputers since they went on the market in June. The company had hoped to win a Defense Department contract during the last quarter of 1990, but the order never materialized, Simon said.
Simon linked Supercomputing Solutions’ problems to “a combination of the recession and the Department of Defense putting its (spending) priorities on the Persian Gulf. . . . We were waiting for the DOD contract but everything seems to be paralyzed . . . it’s a tough business out there.”
“They were competing with about 10 or 12 other companies for a market that’s something like $130 million,” Willard said. “The pond just wasn’t big enough for all of them.”
Supercomputing Solutions reported a $1.1-million net loss on $738,723 in revenue during the second quarter ended June 30. That compared to a $743,723 loss on $360,752 in revenue during the like quarter a year ago.