Dataproducts Expects 50% Drop in Profits

Dataproducts Corp., blaming increased marketing costs amid a computer industry slump, said Wednesday that it expects fourth-quarter earnings to fall 50% on a 10% drop in sales from the previous year’s quarter.

The Woodland Hills-based maker of computer printers said its earnings will be $5.3 million on sales of $113.8 million for the three months ended March 30, largely because a slowing of growth in the U.S. economy has softened sales in all segments of the computer industry.

The stock was the fifth most active Wednesday on the American Stock Exchange, closing at $13.125 a share, down 87.5 cents.

Dataproducts President and Chief Executive Charles Dickinson said the company’s rising costs for marketing and developing new products also contributed to the poor quarterly performance. But he said the costs will pay off in the long run.

Dataproducts has carved a niche for itself by supplying printers to other computer companies that then sell the products in the retail market. Last fall, however, the 22-year-old company branched out by offering a printer under its own label, a move that increased the company’s costs for advertising and other marketing efforts.

Dickinson said the slowing of new orders that began in the third quarter has continued in the fourth quarter.

“The market conditions experienced by Dataproducts are being felt broadly throughout the computer industry,” he said, adding that he expects the industrywide slump to continue through the next quarter.