Diceon Electronics was in a downward spiral.
With sales of its specialized computer circuit boards plummeting and losses growing through the early 1990s, it began laying off a third of its workers. It eventually became insolvent, and its stock was removed from trading on the Nasdaq market system.
The story is familiar in the competitive high-technology industry, where companies rise and crash so fast they barely register a notch on the Richter scale.
Companies removed from stock market exchanges generally do not return. If they do, usually "it's after they've been bought by another company," said James D. Spellman, a Nasdaq spokesman.
But Diceon avoided bankruptcy. A new chairman took control last year, assumed a chunk of the company's debt and began engineering a radical change that led to a rare feat: After a 15-month hiatus, the company's stock was relisted on Nasdaq this week.
Its fresh start prompted the company to rename itself Elexsys Electronics Inc.
"We've still got a long way to go . . . but we think we're on the right track to finish the year profitably," said Elexsys' chairman, Milan Mandaric.
The company, which employs 250 in Irvine, must still focus on making its production more efficient, rather than pursuing expansion into new territory, Mandaric said.
The company lost $53 million over five years before posting a $2.6-million profit last year. But its financial problems should not deter its business customers from buying its circuit boards.
Demand is such that buyers are willing to overlook the financial condition of suppliers if they have worked well together in the past, said Mark A. Plummer, an industry analyst at Stephens Inc., an investment banking firm in Little Rock, Ark.
"For these products, you've got customers who are willing to pay," Plummer said. "Some of them can cost upward of $10,000. But they're going to give you rush jobs, and they expect you to come up with a way to deliver it timely.
"It's not like making PCs, where you're constantly cranking them out."
As Elexsys, the company will continue to sell the multilayered circuit boards it builds at plants in Irvine, Sunnyvale, Mountain View and Nassau, N.H., with a total work force of 830.
Most of the equipment it makes is sold to manufacturers and providers of telecommunications equipment, such as Northern Telecom Ltd. in Ontario, Canada, and Digital Equipment Corp. in Maynard, Mass.
Beginning in the late 1980s, Diceon ran into trouble as its expansion projects at a new plant in Chatsworth failed to produce the returns it expected. At the same time, the market for its specialized products was becoming more competitive.
The company decided to scuttle its attempt to move into related circuit boards in 1993 and closed its Chatsworth plant, laying off 100 workers there. Heavy spending to meet environmental regulations and clean up spills at its Bay Area plants also cut into profits.
Last year, the company laid off 300 more workers, including 45 last fall at its Irvine operation.
But it attracted Mandaric to its board last year in a deal that helped the company finally post a profit. The profit was attributed mainly to an accounting technique that gave the company a $10-million gain in a complicated stock agreement with Mandaric, who assumed part of the company's debts.
After the company's president and other top officers resigned last fall, Mandaric took control. Besides restructuring the company and getting the stock relisted on Nasdaq, Mandaric plans to work on customer relations and custom circuit boards in an effort to attract new business.
This year, the company will move about 80 sales and administrative jobs from Irvine to the Sunnyvale facility where Mandaric works. About 170 workers will remain at the Irvine plant and headquarters.
Mandaric, who emigrated in 1969 from Yugoslavia with a degree in mechanical engineering, had founded a small company in Stockton to build circuit boards. After selling that company to Tandy Corp. in 1980, he started Sanmina Corp., serving as chairman and chief executive until 1989.
"At Sanmina we always looked at Diceon as a giant, but they didn't take advantage of their muscle," he said. "When I came in, I knew they had a good product line, and that's what it's got to focus on."
Mandaric left Sanmina's board in February, 1994, but still holds stock in the company. He said he expects to sell that stake soon.
"All my loyalty is to Elexsys now," he said. "You get to a certain point with one company and you realize that you've scored a goal and it's time to move on."
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After losing $53 million over five years as Diceon Electronics, the restructured, reinvigorated company, renamed Elexsys Electronics, posted a profit for its last fiscal year, which ended Sept. 30. Sales, however, continued to slide. Amounts in millions:
Source: Diceon Electronics; Researched by JANICE L. JONES / Los Angeles Times