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Alpha Micro Fight Boils as Co-Founders Seek Control

September 11, 1986|CARLA LAZZARESCHI | Times Staff Writer

As the fight for control of Alpha Microsystems ended its ninth day Wednesday with no apparent solution, a representative of the company's two founders said they want to regain control of the faltering computer maker because of "violent disagreements" with management over the company's direction.

Harry Hathaway, attorney for the founders, said that a major point of disagreement is a proposed merger of Santa Ana-based Alpha Micro and Point 4 Data Corp., a rival Irvine computer maker.

Hathaway said that while Alpha Micro founders Robert Hitchcock and Richard Wilcox oppose the merger, they believe that corporate officials support it as a way of solving their financial and marketing problems. Hitchcock and Wilcox control a total of 25.2% of the company's stock.

Hathaway's comments were the first official explanation of the announcements last week that Alpha Micro was the subject of competing takeover bids from Point 4 and Hitchcock and Wilcox.

The two founders are asking shareholders to give them voting control of the company while Point 4 has offered to buy 49.9% of Alpha Micro shares and merge the two companies.

So far, Alpha Micro has said nothing about the proposals and has asked shareholders to take no action until the company's management acts. An official reaction could come Friday afternoon, after a board meeting scheduled for that morning.

Alpha Micro, which makes business computer systems, has been hit hard in the last two years by the general downturn in the high-tech industry. Its losses over the last 18 months are estimated to total $4 million, and its sales have declined nearly 8%.

In an effort to reverse the slide, Alpha Micro has introduced two major new products in the last year, including its largest and most sophisticated multiuser computer system. In addition, Chief Executive Richard Cortese met with Point 4 officials earlier this year to discuss a possible combination of the two companies as a means of building market presence. No formal action ever came of the discussions.

However, Hathaway said that by early last month, Wilcox and Hitchcock had become fed up with the company's performance and with the proposed solutions to its problems. The two men tried to convince fellow board members to force Cortese to turn over leadership of the company to a management team headed by Hitchcock, the attorney said.

Their proposal also called upon the company's two outside directors, who originally brought Cortese to the company, to resign. The two directors are Fred Krimm, a vice president of the Bateman Eichler, Hill Richards brokerage in Los Angeles, and Neil Diver, managing director of Oakmont Corp.

Hathaway said that when Alpha Micro's board did not responded to the proposal, Hitchcock and Wilcox decided to launch a proxy fight for voting control of the company and so informed the board at its Aug. 29 meeting.

Later in the same meeting, the board stripped Wilcox of his title as board chairman and abolished Hitchcock's position of vice chairman.

In an interview last week, director Krimm said the board took the action to show support for Cortese and to ensure that the company was represented by "a single voice" in its business dealings.

Hathaway said the merger discussions with Point 4 were a major source of disagreement between the co-founders and the Alpha Micro management. He said that while the founders opposed the move, their "reading was that management was very much in support of it."

Company officials declined to respond to Hathaway's comments and have made no official statement on the merger proposal.

When Hitchcock and Wilcox were preparing their proxy fight, there was no formal merger proposal with Point 4. However, three days after the co-founders notified the board of their intention to launch the fight, Point 4 filed notice of its attempt to acquire 49.9% of the company for about $9.5 million.

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