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Simple Technology to Sell Part of Business

Computers: A Westlake firm is buying the Santa Ana company's aftermarket operations.

June 13, 1998|LESLIE EARNEST | SPECIAL TO THE TIMES

Computer product maker Simple Technology Inc., which was founded by three brothers in 1990 and quickly became a success, said Friday it plans to sell a chunk of its business to NewCom Inc., a Westlake Village company that makes computer peripherals, such as modems and sound boards.

NewCom will buy the Santa Ana-based company's so-called aftermarket business, which focuses on products designed to be added by PC users after they purchase the machines.

Simple Technology's original equipment manufacturing business, which makes products to sell directly to large computer companies, will not be part of the sale.

Last year, aftermarket sales accounted for more than $120 million of Simple Technology's $160-million total, the company said.

NewCom will use its stock to buy Simple Technology from founders Mike, Mark and Manouch Moshayedi. Specific financial terms of the deal were not disclosed.

Simple Technology has about 270 employees working in two buildings in Santa Ana. No layoffs are anticipated.

NewCom, which has about 120 full-time employees in Westlake Village, will continue its operations there.

The combination will allow the products of both companies to reach a wider customer base, officials said.

"The addition of Simple Technology products, personnel and reputation in the marketplace will position NewCom as a major force in the industry," NewCom Chief Executive Sultan Khan said Friday in a statement.

Last month, Simple Technology's original equipment manufacturing business began operating under a new name, SiliconTech Inc.

After the sale, Mark and Manouch Moshayedi will operate that business. Mike Moshayedi will remain president of the Simple Technology unit under the new ownership.

The three men started the business in 1990 with $100,000. By 1994, the company's revenue had surged to $98.7 million, earning it a No. 13 ranking on Inc. magazine's annual list of the 500 fastest-growing privately held businesses in the United States.

But the company's revenue dropped later because of a decline in prices of DRAMs, or memory chips, Mike Moshayedi said. Simple Technology will have new growth potential under NewCom's ownership, he said.

"It's having access to a public company without having to go public ourselves," he said.

NewCom's stock closed at $10.19 in Nasdaq trading Friday, down 31 cents.

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