Troubled Pinnacle Micro Sees Revenue Decline 77%

IRVINE —  Financially troubled Pinnacle Micro Inc. said Wednesday that its third-quarter revenue was down 77% from a year earlier, and it blamed the drop on industry competition and weak sales of one of its major product lines.

The company, which makes compact disk storage systems, announced a net loss of $14.7 million for the third quarter on revenue of $3.3 million, compared with a year-earlier net loss of nearly $9.1 million on revenue of $14.26 million.

Pinnacle said industry competition and less-than-expected demand for its Apex drives, a high-capacity optical system, contributed to the downturn.

Analysts said the company’s current problems date back two years, when it moved from the reselling business to manufacturing.

Pinnacle Micro has since stopped its internal research and development plans to create the next generation of its Apex drive, according to documents filed with the Securities and Exchange Commission on Wednesday. But officials plan to put together a development team for the drive with the help of outside investors or partners.

In addition, the firm has closed its European sales offices and its Colorado Springs facilities, according to the regulatory filing. It has started to outsource several of its operations, including assembly, technical support, repair services and financial management and accounting.

The company continues to seek outside investors and has retained the bankruptcy law firm Lobel & Opera to help it in dealing with creditors, the filing said.