History (1989): Serious Financial Difficulties for Rodime

If you’re European, are you able to manufacture HODs and make profits?

After Newbury Data Recording (Staines, UK) that quit HDD production, now one of the last European manufacturers, Rodime plc (Glenrothes, Scotland), is having trouble since it lost $44.2 million in two years. For the year ended September 30, it lost $25.7 million or $3.26 a share for a $115.7 million turnover. Last year’s loss amounted to $18.5 million or $2.35 a share for a $112.2 million turnover. Rodime’s debt was evaluated at $23.9 million at the end of February 1989 and the company plans a substantial loss for this year. In the first quarter, ended December 31, Rodime accumulated a loss of $2.6 million, compared with a $509,000 profit in the same period last year. However, sales in this quarter increased 73%, from $40.6 million against $23.4 million last year. These afflicting results lead to several changes in management and the recruitment of a Scottish merchant bank, Noble Grossart Ltd., as financial adviser to try to overcome the financial problems of the company.

The first rumors about the selling of part or all of the company mention Hyundai (Korea) that already manufactures FDDs.

The fact that Rodime’s recently appointed MD, Peter G. Bailey, who was formerly SVP at Control Data, and also at Credit Corp., specialized in the sale of companies, sustain these rumors.

In addition, on March 31, 1989, Leonard Browlow, chairman, stated: “Discussions are taking place regarding the sale of the company, or certain of its subsidiaries.“

What are reasons generally given about Rodime’s difficulties?

• If the company was a pioneer in 3.5-inch drives, it seems that it took too long to produce new models. The only manufacturer on the market for 18 months, it rested on its acquired technology.
• Rodime remained for a long time Apple’s sole supplier of HDDs. It’s no longer true, and its share reduced considerably in favor of manufacturers like Sony and Quantum.
• The recent drops in Apple’s prices forced Rodime in lowering its prices so much that some drives are sold at a loss in order to be competitive.
• The Scottish company also had to face production problems in these last months, meaning shipment delays mostly because of part shortages. It announced it had laid off 150 employees in its manufacturing plant in Boca Raton, FL and in Scotland.
• Rodime is involved in several lawsuits: Jasmine Technologies (San Francisco, CA) a large OEM customer sued Rodime in March for $25 million estimating that officials of the two companies tried to weaken Jasmine so that Rodime could acquire it at a lower price. Jasmine again, but also Apricot Computer (UK) begrudged Rodime to have supplied drives that did not meet specifications. Rodime also has two suits against IBM and Conner Peripherals for abusive use of its 3.5-inch HDD licenses.

This article is an abstract of news published on the former paper version of Computer Data Storage Newsletter on issue ≠15, published on April 1989.