Decrease in Profits Reported by Xircom

Xircom Inc., a Thousand Oaks maker of portable computer communications devices, said increased competition contributed to a 37% drop in its net income to $2.47 million in the second quarter that ended March 31, down from a $3.92-million profit a year earlier. Sales in the latest quarter increased 32% to $40 million, up from $30.2 million over the same period last year.

For the six-month period, Xircom’s net income also fell 5% to $7 million, down from $7.4 million a year earlier. Through the second quarter, Xircom’s sales increased 41% to $80.1 million, from $56.6 million during the same period a year earlier.

The company said it expected further competition in the credit card-sized devices that allow computer networks to communicate over local area networks.

Dirk I. Gates, Xircom president, said the company, which has 315 employees worldwide, slashed its work force by 10% to control expenditures.

“We still have high levels of inventory in our distribution channels that need to be reduced,” Gates said. “This, together with the competitive pricing environment, will likely result in quarter-to-quarter declines in our LAN adapter business over the near-term.”

In a separate matter, Xircom announced an agreement to acquire Primary Rate Inc., a New Hampshire-based software firm, for cash and stock valued at about $48 million. Xircom said the purchase will allow Xircom to expand its target markets.