History (1995): Micropolis Struggling

Micropolis Corp. (Chatsworth, CA) said last March, 23 that it expects to report revenue of $40 to $45 million and net loss from operations between $30 and $35 million for the first quarter of 1995.

This loss doesn’t include any additional one-time charges that may result from workforce reductions and other measures.

The Californian company’s sales for the preceeding quarter were $108 million with net income of $4.8 million.

This big drop is a result of sharply lower orders for its 4 and 9GB drives in the distribution channel.

In addition, the company experienced a recording head problem and other technical issues which shut down production of its 2GB Taurus drive for most of the quarter.

“Although the problems faced by the company are severe, several measures have been taken to stabilize the situation,” said Stuart P. Mabon, president and COB. “First, we have initiated shipments of a 2GB Capricorn 3.5-inch drive. Also, to resolve the technical and component issues associated with the low-profile Taurus 2, we have assembled a top engineering team in Singapore. Technical solutions are in the process of being validated. We currently expect that this validation will take approximately two more weeks.”

From a management viewpoint, we have increased the responsibilities of Taroon C. Kamdar, EVP and a veteran of the disk drive industry, to include WW sales and marketing for distribution drives and subsystem. Taroon will continue to oversee WW manufacturing for the company. Barbara V. Scherer has been promoted to SVP finance, CFO and treasurer, replacing Dale J. Bartos, who has left the company to take the position of CFO at Integral Peripherals (Ed: replacing Roger Mason). The senior officers and I have taken an immediate 10% reduction in pay and will receive a larger proportion of compensation tied to future stock price performance.“

“To reduce operating expenses high and improve near-term cash flow, we have also initiated cost savings measures by cutting certain programs and other costs which are not essential to our near-term plans,” said Scherer.

These measures are expected to reduce quarterly operating costs by $2.5 million, and include a workforce reduction of approximately 11% in the USA and Europe.

Micropolis also stated that, based on the indications currently available, revenue is expected to increase in the second quarter but without enabling the company to make a profit.

While the firm believes it has sufficient liquidity to meet its shot-term financial needs. Should second quarter revenues prove to be lower than currently anticipated, the company could be required later in the year to seek additional financing. Most likely, such financing could be obtained from its present lenders or other sources if needed, but there can be no assurance as to the terms on which it would be available, if at all.

This article is an abstract of news published on the former paper version of Computer Data Storage Newsletter on issue 87, published on April 1995.