Advanced Logic Research Inc. said Friday that it expects to post a loss, the first in its history, for the quarter that ends Sept. 30.
Gene Lu, chief executive of the Irvine-based personal computer maker, blamed the anticipated loss for the company's fiscal fourth quarter on the combination of the recession and computer industry price cuts that have eaten away at ALR's once-comfortable profit margin. The company's quarterly sales, he said, are expected to be as much as 10% lower than the $52.7 million reported for the previous three months.
For its fourth quarter last year, ALR reported a profit of $4.2 million, or 37 cents a share, on revenue of $65.3 million.
Good times have changed fast in the PC industry. Manufacturers have been withdrawing from the market, a trend that has intensified partly because of deep price cuts in June by Compaq Computer Corp.
ALR's stock has steadily fallen from a 52-week high of $14.50 a share Oct. 18 to a third of that now, largely because of speculation that price cuts by major computer companies would cause losses among the host of so-called clone makers like ALR.
ALR's stock closed at $4.75 a share on Friday, up 50 cents, in trading on the NASDAQ market. The announcement of the expected loss, the amount of which was not specified, was made after the market closed.
Ron Sipkovich, who in July succeeded James Richardson as chief financial officer, said the company chose not to expose itself to inventory risks by shipping large numbers of computers to its distributors this quarter.
Lu said the company is not planning layoffs, but he said that option will remain open if the competitive picture worsens. ALR has about 650 employees, down slightly in the past year because of attrition.
Still, Lu said, the company expects to report a profit for the fiscal year. He also said that ALR will continue to upgrade its product offering, beginning with some new products in October.
"The difficulty of this business is in constantly transitioning to sales of new products," he said.
Wall Street analysts were estimating that ALR would report a profit of 42 cents a share, or about $4.7 million, for the fiscal year. Sipkovich said that the company will post a profit, but that the amount will be less than $3 million, or 27 cents a share.
Revenue for the fiscal year is expected to be 10% below last year's $228 million, the company said.