Micro D 2nd-Quarter Profits Nearly Double ’87 Period

Micro D, the nation’s leading distributor of personal computer products, reported Tuesday that profits for the second quarter of 1988 nearly doubled over the same period a year earlier.

Santa Ana-based Micro D said that net income for the second quarter rose to $2.2 million from $1.1 million a year earlier. Net sales increased 69%, to $129.5 million from $76.8 million in the second quarter of 1987.

For the first six months of the year, the company reported net income of $3.8 million, 50% higher than the $2.6 million posted for the first half of last year. Net sales totaled $245.5 million, a 55% increase from the $158.6 million recorded for the like period in 1987.

A favorable tax rate and tax credits accounted for 41% of the gain in second-quarter profits, according to Micro D Chairman Linwood A. (Chip) Lacy. He said the company’s income was taxed at a rate of 31% for the second quarter of 1988, compared to 45% a year earlier. Pre-tax profits rose by 51% for the second quarter of 1988, he said.

“We’ve had an excellent quarter with strength in sales across the board. We made significant improvements in handling customer calls,” Lacy noted.

Micro D distributes software and hardware peripherals such as printers, monitors, hardcards, modems and power supplies.

The company functions as a computer industry middleman, buying products from scores of companies that write software and manufacture parts and peripherals for Apple and IBM-compatible PCs and then resells those products to retailers on short notice.

“Micro D is in a very nice position because as the base of PCs expands, their business expands with it, yet they don’t have to worry about the technology risk factor,” said Jeffrey Kilpatrick, president of Newport Securities.

PC distributors as a group, a $2.5-billion market, have ridden the wave of the surging PC market, which in 1987 grew by 40%.

Lacy said Micro D sales got a boost in the second quarter from recent software distribution agreements with CLARIS, the software division of Apple and Aldus, desk top publishing software used for both Apple and and IBM PCs.

The company also benefited from the doubling of its telemarketing staff to about 40 people in the spring.

Micro D stock closed on Wednesday at $10.625 a share, up 75 cents a share on the day.