Compaq to Accept Repaired Golden Systems Units

Golden Systems Inc., the Simi Valley-based maker of power supply units for computers, said its biggest customer, Compaq Computer Corp., has agreed to accept shipments of repaired power supply units that Compaq had previously rejected as defective.

In December, Houston-based Compaq said it found quality problems with Golden Systems’ power supply units and shipped back $5 million worth of the units that had been delivered in the prior six months. Compaq also ordered a production halt on additional units, putting Golden Systems’ future in jeopardy because Compaq accounted for 70% of Golden Systems’ sales last year.

Raymond Thomas, chief operating officer at Golden Systems, said Compaq has agreed to accept for inspection and possible purchase about 75% of the units initially rejected. The first 2,000 repaired units have already been shipped to Compaq, said Thomas, who added that Golden Systems has reached an agreement with its bank to forestall a default on its line of credit.

In the meantime, Golden Systems has cut costs and laid off workers at its manufacturing plants in India, and the company’s chief executive, Jay Tandon, “has deferred his salary for the foreseeable future” to conserve cash, Thomas said.