Micom Expecting Loss for Quarter as Sales Lag

Lower-than-anticipated sales are expected to result in a net loss during the current quarter at Micom Communications Corp., a leading Simi Valley producer of computer networking systems.

Barry Phelps, chairman and chief executive, did not estimate the amount of the loss but said Micom has decided “to take aggressive corrective action by significantly reducing our shipments.”

Reduced sales have created high inventory levels among Micom’s distributors, Phelps said, and the goal now is to “bring reseller inventories down to desired levels.”

Phelps said Micom, which says it is the world’s leading producer of low-cost, wide-area network products, expects revenues in its fiscal third quarter, which ends Dec. 31, to be in the range of $16 million to $17 million.

That would compare with sales of $20.3 million in the same period last year. Micom earned $1.3 million, or 11 cents a share, in the year-ago quarter.

With a payroll of 400, Micom is one of Simi Valley’s largest employers. The company’s revenues totaled $81 million in the year that ended March 31.

Micom blamed its current problems on disappointing sales of its software for sending phone conversations and data through special high-speed telecommunications lines that connect computer networks.

Sold under brand names such as Marathon and NetRunner, the systems are designed to save companies money by integrating data, voice and fax communications.

Marathon and NetRunner are distributed in more than 85 countries. The systems were recently given a boost when they were declared compatible with relay services provided by AT&T; and Sprint.

Micom said it expects to report a profit for the first nine months of its fiscal year but that sales will be down for the three quarters.

While the company did not estimate how much it will earn for the nine-month period, it said revenues will total about $62 million.

This would compare with revenues of $66.8 million a year earlier. Micom had a net profit of $5.6 million, or 48 cents a share, in the year-ago period.

Phelps predicted that overseas sales and worldwide customer enthusiasm for Micom’s products will return the company to profitability. “We believe that revenue and profit growth should resume now that sales channel inventories will be reduced,” he said.