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Archive Links Earnings Drop to Acquisition

November 22, 1990|GREGORY CROUCH | TIMES STAFF WRITER

COSTA MESA — Archive Corp., a maker of computer memory backup products, said Wednesday that its fiscal 1990 net income fell nearly 25% to $11.5 million from the year-earlier $15.3 million.

Despite the drop in income, revenue for the year ended Sept. 28 was up 62% to $293 million from $181.4 million in fiscal 1989.

The company attributed the earnings decline in part to its April acquisition of Cipher Data Products, which cost $123 million and resulted in the May layoff of about 95 people among the two companies' combined 3,200-employee work force.

For its fourth quarter, Archive reported net income of $1.8 million, down 57% from $4.2 million in the same period a year earlier. Revenue, however, nearly doubled to $94.9 million from $49.7 million.

Howard Lewis, Archive's chairman and chief executive, recently attributed the soaring revenue to the Cipher acquisition and steady sales of Archive's 0.25-inch computer cartridge tape drives and controllers.

But Lewis said in a statement issued Wednesday that "the outlook for the overall economy is uncertain and the computer industry is reporting a softening in sales." Archive, he said, "will proceed in 1991 with care to . . . maintain expenses in line with revenues."

Archive attended the gigantic Comdex computer show in Las Vegas earlier this month with a large exhibit. But the company did say it had implemented a hiring freeze because of general concerns about a national recession and more specific worries about the sluggishness of the computer market.

Archive's stock price is so depressed that it is now trading below its book value--essentially a corporation's value figured by subtracting all its debts from its total assets. Archive's book value is $5.76 per share.

Jeff Kilpatrick, president of Newport Securities, recently pointed out that Archive is one of a handful of local companies to trade at or below book value. The company stock's high for the year is $13.88 a share and its low is $4.25.

Archive's stock--traded over the counter--was down 37.5 cents Wednesday to close at $5.50.

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