Kaypro OEM Sales
Kaypro Corp. has signed a $4 million contract to provide computers to be used by major oil companies in a computerized gas station inventory monitoring system.
The Solana Beach computer maker will supply specially configured personal computers to the Wayne division of Dresser Industries of Austin, Texas. Wayne, an established manufacturer of gas pumps, will sell the equipment to the oil companies for installation in an estimated 2,000 gas stations across the country by December 1988.
The contract with Dresser-Wayne is a multi-year agreement that could be worth as much as $8 million to Kaypro.
Kaypro President David Kay said the computerized system marked a major advancement for the oil companies that operate the gas stations. "It's a big step forward for that industry to have a more automated inventory tracking system," Kay said. The contract couldn't come at a better time for Kaypro, which announced in mid-November that it lost $9.6 million in fiscal 1987 due in part to declining sales of its line of transportable computers and problems associated with getting its new 2000+ laptop computer to market. In conjunction with its year-end figures, Kaypro also announced it was dropping the transportable line.
The deal with Wayne is the latest of several sales Kaypro has made over the past few years to original equipment manufacturers (OEMs), who incorporate Kaypro's computers into specialized systems for sale to end users. Sales to the OEM market now account for an estimated 10-15 percent of Kaypro's total dollar volume, but Kaypro founder and chairman Andrew Kay said yesterday, "It could be 20 to 25 percent of total business by the end of (1988)."
"It's something we don't mind doing - as long as our name's on the product," David Kay said. "Actually, I think there's a lot of business out there along those lines."
Previous OEM deals included equipment sales to Airborne Express and Stars To Go, a Los Angeles based company that used Kaypro computers in its video cassette rental Stores. Kaypro expected the Stars To Go agreement to be worth $14 million, but the company ran into trouble last year and Kaypro had to take a $2.1 million reserve to reflect uncollected payments on the contracts.
Kaypro jumped into the personal computer market in 1982 with the introduction of its first transportable, bulky, metal-cased unit. The transportables accounted for most of Kaypro's revenues as recently as two years ago, but the line contributed only about half the company revenues in 1988 and accounted for less than 10 percent this year, according to company officials.
(Company sells comuters for gas-station use, David Coburn, Tribune Financial Writer, Clipping from David Kay)