Tandon Posts 2nd-Quarter Loss of $19.3 Million

Battered by the cutthroat price wars that have plagued personal-computer makers during the past year, Tandon Corp. posted a large second-quarter loss and laid off 13% of its work force.

Tandon, based in Moorpark, said it was forced to reduce prices on its PCs because of the sluggish economy, the introduction of low-priced PCs by its competitors and its sales to mass merchants who sell PCs for less than other distribution channels.

As a result, Tandon said it lost $19.3 million in the quarter that ended June 30, in contrast with a year-earlier profit of $696,000. Its revenue fell 24%, to $93 million from $122.7 million.

The loss included reserves of $10.3 million for revaluing its inventory. Tandon also said its revenue declined during the quarter because of “the unavailability of certain products” that it uses to assemble its own products.

Tandon’s work force reduction included about 35 employees who were laid off earlier this month in the United States. The remaining layoffs were in Europe during the second quarter. Tandon now employs 1,350 workers.

The company said it is also reducing the number of mass merchants that sell its computers to concentrate on a few accounts such as Sam’s Club, a nationwide membership warehouse club owned by Wal-Mart Stores. Product returns from discontinued merchants, such as BestBuy, added to the second-quarter loss, it said.

Tandon’s six-month loss totaled $18.3 million, compared with a profit of $6.7 million a year before. Revenue was $201 million, down 17% from $243 million.