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Good Guys to Exit Computer Sales, Cut Jobs

July 27, 1999| From Times Staff and Wire Reports

Good Guys Inc. said it is getting out of the computer and home-office products business by the end of this quarter to streamline operations and expand communications and Internet service offerings.

That makes at least a division of the San Francisco-based consumer electronics stores another victim of the troubled computer-retail industry.

Falling computer prices have meant tightening margins for everyone in the general computer business. What's more, direct merchants such as Dell Computer Corp. are increasingly able to woo buyers of the more sophisticated computers that offer better returns--another blow to computer retailers.

CompUSA, for example, has posted a loss or declining profit for each of the last five quarters.

In its 1998 annual report, Good Guys said the home-office division generated 17% of overall sales, down from 19% the year before.

Alton Lewis, managing partner of investment bank L.H. Alton & Co. in San Francisco, said Monday's announcement may make Good Guys more attractive to potential merger partners--especially retailers already in the computer business.

Good Guys said its fiscal third-quarter net loss widened to $8.1 million, or 54 cents a share, from $2.6 million, or 18 cents, a year earlier. Sales for the quarter rose slightly to $210.5 million, from $209 million.

The company said it would lay off at least 100 employees as part of a restructuring aimed at cutting costs by 20%, or about $8 million. The restructuring program would result in a fourth-quarter charge.

Good Guys' shares fell $1.19 to close at $7 Monday on Nasdaq.

Good Guys, with stores in four Western states, said it will focus on wireless phone sales and create a department for new technology and Internet-related products such as digital cable TV set-top boxes and products for high-speed connections.

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