Singapore Technologies, parent company of Micropolis, a wholly-owned subsidiary, filed last Wednesday in Los Angeles bankruptcy court.
Although Micropolis has filed for reorganization under Chapter 11 of the U.S. bankruptcy code, the company currently has a message on its answering machine indicating that it plans to liquidate its assets.
"Singapore Technologies has decided to exit the disk drive business?.and all operations of Micropolis have ceased," the recording said. "The intent of Micropolis is to quickly liquidate all its assets and resolve the claims of its creditors."
Read-Rite today said it will take up to a $15 million charge in the fourth quarter for reserves against any non-payment by Micropolis.
Read-Rite also said it will readjust its fiscal 1997 results to reflect the liquidation of Micropolis, whose business was expected to account for less than 1.5 percent of Read-Rite's net sales in the first quarter. The company said it plans to take any and all necessary actions in order to recover the payments due, but there are no guarantees it will be successful.
Micropolis' announcement comes as several disk drive makers have issued warnings that their quarterly performance will fall below analysts' expectations.
Seagate, for example, just yesterday issued a preliminary warning of continued weakness in demand for its high-performance products, and also predicted greater-than-anticipated pricing pressure. The company said that likely will push its second-quarter earnings downward, causing it to miss Wall Street expectations for the earnings period ending January 2.
Other storage makers noted that new competitors in the sector are also are affecting their earnings performance.