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Alpharel Gets New Top Staff as CEO Quits

December 29, 1987|By GREGORY CROUCH | Times Staff Writer

Alpharel, the troubled computer data storage company in Camarillo, announced a management shake-up last week when its founder, Michael McGovern, and another executive resigned.

McGovern, who started Alpharel in 1981, stepped down as chairman and chief executive officer but will remain at the company as a technological consultant. Chief financial officer William Sweeney also resigned.

Succeeding McGovern as chairman is Gene Holloway, an Alpharel director and private consultant. Clay Chisum, the company's president, was named acting chief executive officer and Robert Glatt, a Moorpark financial consultant, was named acting chief financial officer.

Refused Comment

McGovern, 58, refused to elaborate on his resignation.

But Chisum said "there were some outside pressures on Mr. McGovern." He didn't go into details.

Alpharel's most pressing problem is that a contract accounting for most of the company's revenue will expire in nine months. For the last three years, Alpharel has been dependent on a contract with AT&T, which supplied the Army and Air Force with a data storage system put together by the two companies. In 1986, the AT&T deal accounted for 91% of Alpharel's $13.9 million in sales, as the company turned a $1-million profit.

But the AT&T contract expires in September, and it is not being renewed, so Alpharel is scrambling to fill the void. In the meantime, bigger and richer firms than Alpharel have announced plans to sell similar data-storage systems including Eastman Kodak, Wang Laboratories and 3M.

As a result, for the nine months of fiscal 1987 ended in September, the company reported a $244,000 loss, contrasted with a profit the year before, on $10.7 million in revenue.

The expiration of the AT&T contract is not Alpharel's only problem. After the company's public offering in June, $18 million of the $20 million it raised was invested in a single mutual fund. The company suffered a $747,000 loss on that deal.

Investment Loss Costly

Chisum said Sweeney's resignation was partly because of the investment loss, although Sweeney said he left to go into business with his father.

The company's problems have led to a steady decline in the price of its stock. Alpharel went public in June at $11 a share. Monday, its stock closed at $2.75 a share. Earlier this month, Forbes magazine listed Alpharel as one of the year's worst-performing new stocks.

Because Alpharel spent much of its time supplying the Air Force and Army, most of its data systems are too expensive to interest small companies. Analysts say the commercial market is where the real opportunity for profit exists. Chisum, 50, said Alpharel's priority is to penetrate that market. "We think the company has a bright future, and we are looking forward to capitalizing on that future."

Phillip Brannon, an analyst with Merrill Lynch in New York, emphasized McGovern's accomplishments in perfecting Alpharel's technology but said the company needs a more experienced marketing executive to sell smaller and more versatile systems.

"It should have been obvious that a PC-based product would hit a home run," Brannon said. "A more marketing-oriented executive would not have waited."

Five months ago, McGovern said he considered himself a scientist before anything else. "I never thought of myself as a businessman," he said. "Thirty years ago, I was living in Arizona, and I was sent to the GE professional management school. I just did it because they told me to. I couldn't have cared less about management. Now I realize that, if you don't have it, the company is doomed."

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