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Commodore Closing Two Plants; May Post Quarterly Loss

January 10, 1986

NEW YORK (AP) _ Commodore International Ltd. is closing plants in California and England and is taking write-downs that may result in a loss in the second quarter ended Dec. 31, contrary to earlier predictions, the company said.

The personal computer maker from West Chester, Pa., which is in technical default on a package of loans, would not estimate the size of the write-downs or of the possible loss. The company said it is closing a chip-making plant in Costa Mesa, Calif., dismissing 200 workers, and a computer assembly operation in Corby, England, dismissing 250 workers.

As recently as Monday, Thomas J. Rattigan, Commodore’s president, told reporters that the company would post a small profit in the second quarter.

Paul Lazovick, Commodore’s director of investor relations, said Friday that he could not comment on what Rattigan told reporters because he did not hear it first-hand. He said the company still expects to report a second-quarter pre-tax profit on operations, excluding extraordinary charges.

Commodore posted big profits through the end of 1984 but lost $184 million in the first nine months of 1985. Analysts said banks that made loans to Commodore have a stake in keeping the company in business so they can take a portion of its cash flow to get their loans repaid.

Commodore reported good December sales of its low-priced 64 and 128 models but said sales of the new Amiga were at the low end of expectations. The Amiga, which is praised for its strong graphics capabilities, is considered crucial to the company’s future.

Lazovick said the chip-making being done in Costa Mesa would be moved to a plant in Norristown, Pa., and the computer assembly in England would be moved to a plant in Hong Kong.

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