reisert@ricks.enet.dec.com (Jim Reisert) (11/29/90)
Northgate Computer Systems - Says it violated loan covenants
{The Wall Street Journal, 23-Nov90, p. B4}
Northgate Computer Systems, a fast-growing maker of IBM-compatible personal
computers, disclosed in a filing with SEC that it has violated covenants of
its bank loan and that its CEO resigned. Northgate, which has projected that
sales will more than double to $240 million this year, appears to have
overreached itself in trying to become a big personal-computer player so
quickly. Northgate was caught in a wave of discounting that beset the already
competitive personal-computer industry in the third quarter as growth slowed.
The company, which has grown so fast by combining rock-bottom prices with
solid service, is also cutting costs rapidly so that it can keep up with the
price competition. New CEO, Gary Held, said that 150 jobs have been cut since
the beginning of September, reducing the work force to 720. He and two other
senior executives are taking pay cuts as large as 50%.
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