Rexon Expects Restructuring to Lead to 3rd-Quarter Loss

Troubled disk-drive maker Rexon Inc. said it expects to report a loss for its fiscal third quarter, which ended June 27, because of restructuring costs.

Michael O. Preletz, chairman and chief executive, said in a statement that the company is restructuring its operations and writing off $38 million to $48 million in intangible assets and licenses. But no layoffs or transfers are planned at its Wangtek Inc. unit in Simi Valley.

Rexon, which makes cartridge tape drives that provide backup memories for computers, has been hit hard by soft demand and price-cutting in the computer industry.

The third-quarter loss will result in a violation of at least one financial agreement with an unspecified lender, the company announced. However, a Rexon spokesman said an alternative agreement has already been reached with another lender.

Rexon said its restructuring will emphasize “functional lines” rather than the firm’s various subsidiaries. “I wouldn’t be surprised to see the subsidiaries’ names disappear fairly soon, with everything renamed Rexon,” the spokesman said.

As part of the new approach, all hardware manufacturing has been moved to Puerto Rico and companywide repair services are being switched to Simi Valley from several sites around the country, the spokesman added.