As Alpha Micro’s Losses Grew, So Did Chief’s Pay
Computer services company Alpha Microsystems gave Chief Executive Douglas Tullio a 19% pay increase--and a $100,000 bonus--for the 1998 fiscal year, even though the Santa Ana company’s losses grew and its sales and stock price both fell by more than 17%.
Tullio’s pay package was disclosed Friday in documents filed with the Securities and Exchange Commission.
The increase in Tullio’s pay is tied to his push to divest the company of failing ventures and help move it out of manufacturing and into the service and Internet applications market, officials said.
“For the first four to five years, I never got a raise. I even took pay cuts when things were tough,” Tullio said. “My compensation is tied to meeting our goals, which includes growing our revenues and helping the company transition into a servicing business. And we’ve been doing just that.”
Indeed, in the new fiscal year, Alpha Microsystems trimmed its first-quarter losses to $989,000, from a $1.2-million deficit a year earlier. Sales grew nearly 20%, to $5.45 million.
The company’s stock, which had been hovering around $1 a share last winter, joined the frenetic boom of Internet stocks in April and hit a 52-week high of $6.19 on the Nasdaq. Nearly 21 million shares traded hands after the company unveiled its online business-tracking software.
Alpha Micro closed Friday at $3.03, a 185% year-to-date gain that tops the 145 Orange County companies traded on the nation’s major exchanges.
That’s a marked turnaround from the recently concluded fiscal year, in which Alpha Micro’s losses grew by 19%, to $3.3 million, or 30 cents a share, from a $2.77 million deficit, or 28 cents a share. Sales for the 12 months fell 17%, to $19.3 million, from $23.5 million in fiscal 1997. Company officials blame the sales downturn on divested operations, which generated $4.8 million in annual revenue.
The company’s stock fell 29% over the same period and badly lagged behind its peers. A $100 investment in Alpha Micro slipped to $71.05 in the 12 months ended Feb. 22. By comparison, that same investment in the Nasdaq Computer Index, a compilation of the 652 computer companies traded on the Nasdaq, grew to $135.84 over the same period.
Tullio saw his base salary rise 19%, to $267,310. Including the bonus, his total pay for fiscal ’98 reached $367,310, a 17% improvement from fiscal ’97.
Founded in 1977, Alpha Microsystems once made computers that ran on a proprietary system. With the emergence of the less expensive, more versatile personal computer, the demand for its products dwindled and its stock price slumped.
Over the last several years, the company has slowly shed its hardware ties. The last divestiture, involving a facility in the United Kingdom, happened last November.
In an effort to expand its product line and generate more revenue, Alpha Micro made a key acquisition this month: Delta CompuTec Inc., a Rochester, N.Y.-based firm expected to contribute about $13 million in additional revenue annually.
