Hoping to spur sales of its Zebra computer line, General Automation Inc., the once financially ailing computer maker, has established a $10-million lease-purchase fund for its dealers through Wells Fargo Leasing Corp., a wholly owned subsidiary of Wells Fargo & Co. in San Francisco.
The lease-purchase option, designed to help finance Zebra computer and software purchases, gives General Automation "a distinct advantage" in the competitive business computer market, said Joseph Allen, vice president of corporate affairs for the company.
General Automation, based in Anaheim, competes against 20 other computer makers selling hardware using the Pick operating system, Allen said. The Zebra, the company's principal product, is a multi-user business computer system.
"This is a benefit for us because it is a selling tool for the company and dealers. This gives us another arrow for our quiver," Allen said.
Most of General Automation sales are to dealers who buy the computers and add specialized software to them. The dealers then sell to the final user. By offering leases with an option to purchase, dealers will have a financial alternative for their customers, i.e., smaller companies won't face a major cash outlay if they want a General Automation computer, Allen said.
Leasing as a sales aid has become a common practice in the computer industry, Ronald D. Schell, assistant vice president of Wells Fargo Leasing Corp, said.
Leasing allows customers to control their budgets and take advantage of tax benefits because of depreciation schedules, he added.
Allen said the leasing program will have no direct impact on General Automation's revenues. But the company hopes leasing will improve cash flow.
"We hope, as more people use the leasing funds, we will get the receivables sooner. The average right now for receivables is 30 to 35 days. It would be ideal to get the average under 30 days where it will have a positive impact on our cash flow," Allen said.
The leasing fund shows that General Automation is in good shape, said Robert Sullivan, a Paine Webber Inc. analyst.
"The fact that they can line up credit is a favorable indication. It's a plus that they can get credit and that they see need for it. What's more important is that incoming orders have been strong and things have been going well for General Automation," Sullivan said.
For the first six months of its fiscal 1987, General Automation's net earnings were $366,000, compared with a loss of $1.2 million in the six months ended Feb. 1, 1986. Sales of $18.9 million were up 13% from $16.7 million in the prior fiscal year's first half.