Procom Plans Write-Off

Santa Ana-based Procom Technology Inc. said Wednesday that it will write off an acquisition it made last year, costing the company as much as $2.5 million, and that it had an unexpected operating loss in the most recent quarter.

Procom, which makes computer storage products, said the operating loss results from shifting its product line to take into account a more competitive market.

The loss for the three months ended in April will total between $1 million and $1.6 million, or 9 cents to 14 cents a share, the company said.

Analysts had expected the company to post a profit of 5 cents a share, according to Zacks Investment Research Inc.

“For the next six months, we will be going through that product transition,” said Alex Aydin, the company’s chief financial officer. The company will also post a loss in the next quarter ending in July but will resume profitability by the October quarter, Aydin said.

Procom’s decision to write off its acquisition of Invincible Technologies Corp. comes after that division lost many key employees, leases and vendors, the company said.

In Procom’s core businesses, intense competition has pushed prices and profit margins down for storage upgrades, while lower prices for hard drives means that fewer people are using CD-ROMs to store data, Aydin said.

The company hopes that moving to network storage, where there currently is less competition, will strengthen the balance sheet in the long terms.

The company’s stock, which last week reached an all-time low, closed Thursday at $4.06, down 19 cents a share. The company issued its announcement after the market closed.