In a move that took Wall Street by surprise, Dataproducts Corp. announced Friday that it will post a loss of $18 million to $20 million for its fiscal first quarter ended June 30, about double what analysts had predicted.
The Woodland Hills maker of computer printers said about $17 million of the loss is from costs associated with slashing its worldwide work force to 4,000 from 6,000, consolidating some operations, canceling some new products and raising inventory-valuation reserves to account for the slumping low-end printer market.
"It's definitely shocking news," said Bob Grandhi, an analyst at E. F. Hutton. The proportion of loss to revenue, he said, "is devastating, but they have the resources to withstand it."
Loss for Year Expected
For the same quarter last year, Dataproducts earned $8.8 million on revenue of $121.5 million. The company announced May 16 that it would probably suffer an unspecified loss for the quarter just ended, but analysts had pegged it at no more than $10 million.
Dataproducts' stock closed Friday on the American Stock Exchange at $11.50, down 75 cents, with 69,400 shares changing hands in moderate trading.
"They'll certainly lose money for the year," said John McManus, an analyst at Bear, Stearns & Co.
Both Grandhi and Stearns said the losses stem from a necessary retrenchment that should help the company survive slumping industrywide sales and recover from what Grandhi called a misguided foray into home computer printers.
The analysts said that the company is sound operationally and that it has a strong balance sheet.
The company said in its statement announcing the large loss that a return to "normal" profitability depends on "a stabilization of overall industry market conditions."