Golden Systems Reports Nearly 65% Sales Decline

Golden Systems Inc., a once high-flying Simi Valley producer of power-switching devices used in personal computers, suffered a nearly 65% sales decline during the three months ended June 30.

The company blamed the sharp year-to-year decline on the previously reported rejection of some of its products by a major customer, Compaq Computer Corp. in Houston.

Compaq, which once accounted for 70% of Golden’s sales, complained about quality problems with Golden’s units. Compaq has resumed purchasing Golden products, but on a much smaller scale.

Overall quarterly sales, the first of Golden’s fiscal year, fell to $3.5 million from $9.9 million in the previous year’s first quarter.

The company had a quarterly operating loss of $2 million, or 46 cents a share, compared to an operating profit of $48,000, or 1 cent a share, a year earlier.

“The halt in production, lost growth opportunity and restructuring resulting from the product rejection have affected the company’s ability to maintain and build its revenues during fiscal 1996,” the company said in a statement.

Compaq purchased $1 million worth of Golden’s power units during the three months ended June 30, down from $7 million in units in the comparable quarter a year earlier, Golden reported.

“Financial results for the first quarter were consistent with our expectations,” said Michael D. Thomas, Golden’s president and chief operating officer. “We made progress on addressing the short- and long-term issues that face this company, and we have continued to make progress in the second quarter of the current year.” Thomas took over the presidency earlier this year from Jay Tandon, the younger brother of Jugi Tandon, who headed Tandon Corp., a once-booming computer maker that went bankrupt.

Golden, founded in 1991, makes power-switching devices that convert alternating electric current from wall outlets into direct current that is used to power computers. Golden’s manufacturing operations are based in India.