CMS Enhancements’ Revenue Plunges 50%; Profits Almost Vanish : Electronics: Irvine maker of disk drive products cites intense competition and thin margins for second-quarter results.

Hurt by slow sales of some computer disk drive products and intense competition in the data storage market, CMS Enhancements Inc. said Thursday that its sales and earnings dropped dramatically in the second quarter.

Sales for the quarter ended Dec. 31 plunged to $32.8 million, barely half of the $64.8 million in sales the company reported during the corresponding period a year earlier. Earnings for the quarter were $9,000, compared to earnings of $874,000 for the prior year’s quarter.

The company attributed the poor results to sharply lower sales of low-capacity disk drives during the quarter.

It said sales of such established product lines as high-capacity storage systems increased during the quarter, but that profit margins fell because of intense competitive pressure.

During the past year, CMS has faced tougher competition from other Orange County computer storage firms, such as Optima Technology in Irvine and Procom Technology Inc. in Costa Mesa. Frederick Judd, chief financial officer, said competitors have taken niche positions in markets where CMS once dominated.

“While this quarter’s results are disappointing to us, we remain committed to introducing new products complementary to our core enhancement business, while giving us the opportunity to improve our margins in an increasingly competitive environment,” CMS President Jim Farooquee said in a statement.

Judd said the recession is making the market more competitive, but he did not blame the economy for the company’s immediate problems. During December, CMS began marketing in the United States a line of computers made by TriGem Corp., South Korea’s largest computer maker. But Judd said sales of the TriGem machines did not have a significant impact on the second-quarter results.

Judd said the 450-employee company is reviewing its staffing needs, but he declined to comment on any possible layoffs.

CMS stock closed unchanged Thursday at $2.125 per share on the New York Stock Exchange. The earnings announcement was made after the market’s close.