Kaypro Decline
Events listed as best as possible in chronological order:
1988
Kaypro Corp. yesterday announced the layoff of 35 workers, or about 10 percent of its work force. In addition, a company spokesman noted that demand for its planned new generation IBM clone may be falling short of expectations.
The Solana Beach personal computer firm blamed the current layoff, which affected mostly workers in manufacturing, on slower sales caused by "seasonal factors and the recent shortage of semiconductor" parts, along with other factors.
The reductions leave the company with about 310 employees. Earlier this year, the company employed as many as 438 employees. As sales fell by about 30 percent, however, it announced a series of layoffs and recorded financial losses. In 1984, Kaypro employed as many as 700 people.
Interest may also be focused on comments from the company regarding its plans to introduce computers compatible with IBM new Personal System/2 computers. Such machines, which would include the so-called Micro Channel architecture, had been seen by some analysts as holding promise to revive the company's fortunes, because they would open a potentially large clone market with as yet few competitors.
As recently as late July, David Kay, president of the company, had insisted that Kaypro would introduce its IBM PS/2 compatible computer in September and would begin volume shipment of the machines by October.
Yesterday, John Hentrich, the company's general counsel, said that while Kaypro's design for such a machine is nearly complete, the demand for such machines has been disappointing.
"IBM Micro Channel sales have been less than expected by the industry," said Hentrich. "The introduction date of Kaypro's PS/2 Model 50 compatible will depend on the market demand for this architecture. A number of companies that have announced Micro Channel compatible computers, such as Dell Computer, have delayed their product offerings until next year."
Hentrich added that he could not provide an introduction date for the PS/2 compatibles.
For the first nine months of the current fiscal year, Kaypro reported a net loss of $4.4 million, or 12 cents per share, compared to net earnings of $1.3 million, or 4 cents per share for the comparable period last year. Revenues for the period plummeted to $58.9 million from $85.1 million for the first three quarters of last year.
(Clipping, Craig D Rose Staff Writer)
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)