Businessland Has Big Loss, May File Chapter 11 : Computer retailer: The San Jose-based company is also considering a reorganization or sale.

Businessland Inc., the nation’s biggest computer retailer, posted a huge quarterly loss Tuesday and said it may have to file under Chapter 11 of the U.S. Bankruptcy Code.

The once high-flying company said it is also considering a reorganization or sale and has been holding talks with a potential buyer.

Businessland said U.S. and overseas losses swelled its red ink to $43 million in its fiscal third quarter, against a loss of $3.6 million a year ago. The loss for the quarter ended March 31 was equal to $1.41 a share, compared to a loss of 12 cents a year ago.

Businessland attributed the third-quarter loss to a decline in both domestic and foreign business.

“There are lots of reasons. Primarily, our customers did not buy at the level we anticipated,” company spokesman Thomas F. Pelandini said.

Businessland said that as a result of its poor financial performance, one if its major creditors, ITT Financial Corp., has ceased to provide financing.

ITT finances Businessland’s inventory of products from Apple Computer and Compaq Computer. The agreement will be terminated July 5.

Businessland said its other creditor, IBM Credit Corp., continues to provide financing despite the fact that it has fallen out of compliance with its lending agreement.

The company said it is holding talks with its creditors. If they are unsuccessful, the company will not be able to conduct its current level of operations.

Shares in the once-booming computer dealer fell to 50 cents, down 50 cents for the day on the New York Stock Exchange. Last year the shares hit a high of $11.875.

San Jose-based Businessland has seen its profit margin slump--and the black ink turn to red--in the last year as growth has slowed in the computer market while costs have stayed high.

The company said its continued losses had also placed it in noncompliance with certain financial covenants of a $50-million note agreement.

Businessland, which specializes in selling and servicing personal computers, said it is discussing the sale of the company but it gave no details.

It said the outcome of any reorganization or sale depends, in large part, on cooperation from IBM and other creditors.

Sales in the third quarter fell to $269.7 million from $323.4 million in the year-ago quarter.

Businessland said its quarterly loss included a restructuring charge of $17.7 million and a $6-million pending settlement of certain shareholder litigation.

Separately, Businessland and Next Computer Inc. announced they had mutually agreed to terminate their sales agreement effective at the end of May. Businessland has been authorized to sell and service Next products since March, 1989.

Earnings Roundup: D12