Kaypro Decline

Events listed as best as possible in chronological order:

1989

April 5:

Last week's land deal may solve some financial problems for Kaypro Corp., but the local computer maker still faces a dispute over software.

Kaypro officials sealed the long-awaited deal last Wednesday, selling about 8 acres of its Stevens Avenue manufacturing site - land and buildings - to the Signature Group of Los Angeles for $6 million.

Leasing the property back for $60,000 per month, Kaypro retains a five-year option to repurchase the site.

"That's a pretty low price, but the important part of it is that it gets us off dead center," Joseph Marcello, Kaypro senior vice president and chief financial officer, said Monday. "It's a reversible process, which we like."

The bulk of cash raised in the land sale/lease arrangement will go toward repaying the firm's $5 million outstanding loan with its major lender, Commonwealth Financial Corp. of Walnut Creek.

Another $5 million is owed - mainly to a number of computer parts suppliers - but Marcello said he has been negotiating to convert most of those debts into long-term notes.

However, one supplier apparently has backed away from the negotiations table and has moved to federal court to seek payment from Kaypro.

Microsoft Corp., a leading software manufacturer, filed suit March 20 in San Diego U.S. District Court, claiming that Kaypro failed to pay about $750,000 in software royalties under separate contracts in 1987 and 1988.
(Del Mar Citizen, April 5, 1989)

1990

March 2:

Employees of Kaypro Corp. were finally paid Wednesday — nearly a week after workers were forced to skip a payday when the company was unable to meet payroll.

In the latest indication of its deepening financial problems, Kaypro told its 65 employees last Friday that it was unable to pay them because of cash flow problems. Nancy Casey, a Kaypro spokeswoman, said the company failed to meet the payroll because certain sales had not yet come in. However, the sales have since come in, allowing the Solana Beach-based microcomputer manufacturer to pay its employees Wednesday, said Casey.

Casey said that, as far as she knew, last week was the first time in its history Kaypro had failed to meet the payroll.

She also attempted to downplay the significance of the missed payday, saying "it happens fairly regularly at other, smaller companies. It's not unusual."

"We're trying to turn around the corporation. We're trying to be as positive as possible," she added. Recently, Kaypro reported that it suffered a net loss of $19.4 million, or 52 cents per share, on sales of $21.8 million for the year ending last Aug. 31. A few weeks ago, the company was forced to lay off several senior-level engineers, according to Joseph Marcello, a high-ranking Kaypro official who recently left the company, saying he was asked to work for no compensation.

Struggling to regain its financial footing, the company last week named Roy Salisbury as its new president and chief executive officer. David Kay, who had briefly returned to Kaypro as president and CEO after an 18-month hiatus from the company, appointed Salisbury to replace himself as president.

During David Kay's absence from the company, Del Mar resident Andrew Kay, David's father, had served as CEO. Casey said that Salisbury, who previously headed the FCSGroup, a Massachusetts management consulting firm, was brought in by Kaypro because "his specialty is turning companies around." "(Salisbury) says sales are improving," added the spokeswoman. "There's been nothing major lately, but several (sales) are on the horizon."
(Del Mar Citizen, March 2, 1990)