C&C; Technology Head Sees Rise in Revenues
Saying the dark clouds that enshrouded the company over the last year are beginning to clear, Computer & Communications Technology Corp. Chairman E.T. Bahre said revenues could increase to between $90 million and $100 million in 1987, up to 50 percent more than the sales CCT reported for 1986.
Speaking at CCT’s annual shareholders meeting Thursday, Bahre said CCT will benefit from the 25% to 30% increase in demand for computer data storage products he expects this year, due in large part to the resurgence of the personal computer market. CCT’s main business is selling recording heads used in hard disk drives, a data storage device.
The increased market demand is causing CCT to add 500 to 700 employees this year to the 2,500 workers already on its payroll, Bahre said. The company also plans to expand its manufacturing capacity in Puerto Rico, Tijuana and the Far East.
For the first three months of 1987, CCT’s new order bookings exceeded shipments by 250 percent, Bahre said, and backlog is more than double that of a year ago.
Still, the dark clouds that caused CCT’s auditors to qualify their opinion of CCT’s 1986 annual report have not entirely dissipated. CCT was named in a class action shareholder lawsuit alleging the company withheld damaging information in a 1985 public offering of stock in CCT’s Zeta Laboratories subsidiary. The suit could be months, even years from resolution.
CCT is also being investigated by the U.S. Department of Defense for overcharges in connection with defense work done by Zeta Laboratories. The overcharges, which CCT has admitted, forced CCT to effect a costly rescission of the sale of Zeta to Whittaker Corp. last year. All the Zeta employees connected to the overcharges have been let go, Bahre said.
CCT made a $4.5 million provision in its fourth quarter income statement last year against reimbursements, penalties and back interest that it expects to pay the government for the overcharges. The provision, which is a charge on earnings, contributed to CCT’s net loss last year of $27.4 million on revenues of $67 million. The full year loss also reflects a $14.2 million charge on earnings related to the discontinuance of CCT’s thin film head recording business.
