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MSI Data to Halt Dividends, Will Market New Devices

February 26, 1985|CARLA LAZZARESCHI | Times Staff Writer

Reeling from plunging profits and shrinking sales, MSI Data Corp. of Costa Mesa announced Monday that it will stop paying its 10-cent-per-share quarterly dividend to save its dwindling cash.

"Given today's circumstances, it's better to reinvest the cash in the company than to pay the shareholders," said Charles Strauch, president and chief executive of the maker of hand-held electronic inventory-counting devices. He said the move is expected to save the company about $1 million annually. MSI has paid a quarterly dividend since June, 1978.

However, the company tempered its disappointing news for shareholders with the simultaneous announcement that its much-awaited and long-delayed new generation of hand-held electronic inventory counting devices are ready for shipment.

Costly delays in readying the products for market have been blamed for the dramatic 80% earnings plunge MSI has suffered over the last nine months. Strauch said the products, a more sophisticated portable computer for order taking and a new bar-code scanning wand, should make MSI competitive with the companies that have elbowed it out as the industry's top-selling firm.

Although MSI products debuted in supermarkets where they were used by inventory-counting clerks, these days the devices have a wide variety of uses.

Useful in Hospitals

For example, the bar-code scanning Datawand, a device the size of a large fountain pen, can be used in hospitals by nurses tracking a patient's medicine intake. The portable data entry terminals, a system housed in a briefcase-like package, are often used by traveling salesmen who can enter their orders into the terminals and then connect then, via telephone, with their company's central computer, avoiding virtually every shred of paper work once associated with order making. "These products put us on the same playing field as our competitors," Strauch said. "We have no more excuses about new products. Now we have to produce sales."

Strauch said the new products represent the first of what are expected to be families of related devices. Additional products within those groups, he added, are scheduled for introduction later in 1985 and into 1986.

The cost of developing and introducing the new products, Strauch said, was one reason the company decided to eliminate the quarterly dividend indefinitely.

Another, he added, is MSI's long-term hope to buy companies in related fields. Late last year, MSI purchased Azurdata Inc., a tiny competitor in Redmond, Wash., in a stock transaction initially worth about $422,000. The purchase was designed to give MSI much-needed strength in developing computer programs, or software, to operate its data collection devices.

Although MSI pioneered the market for portable data collection devices 18 years ago, the company has lost its leadership position in recent years to faster-charging competitors. During the last several years, the company's share of the domestic market has dropped to about 40% from 60%.

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