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REGIONAL ROUNDUP

Micropolis Predicts Loss as Sales Decline Sharply

March 28, 1995

Micropolis Corp., a Chatsworth-based maker of high-performance disk drives, said it expects to report a loss of $30 million or more for the first quarter of 1995 due to production problems and a drop in orders from customers.

The company said it expects to report sales between $40 million and $45 million for the first quarter, down from $108 million in the fourth quarter last year, when the company reported a $4.8-million profit.

Micropolis said the steep drop in sales is a result of sharply reduced orders for some of its disk drives, as well as production problems that led to a halt in the assembly of one drive product for most of the quarter. It will be several weeks before production of that drive resumes, a company official said.

Stuart P. Mabon, president and chairman of the board at Micropolis, called the company's problems severe, but said that "several measures have been taken to stabilize the situation."

The company said it expects to have a cash balance of about $40 million at the end of the first quarter, down from the $63.2 million reported Dec. 30. To conserve cash, the company has cut 11% of its work force and adopted other measures expected to save a combined $2.5 million over the first quarter.

Second quarter sales are expected to rise, but not enough to make a profit, the company said. Micropolis said it has retained Salomon Brothers to assist it in a review of operational and financial procedures.

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