Wednesday, August 6, 2003
Investor forces out CenDyne's 3 founders
Test Rite puts own executives in charge after complaining of downturn in sales.
SHAKE-UP: Resigning from CenDyne management were, from left, CEO Mo Vahdati, President Ed Meadows and Chief Operating Officer Dean Vahdati. The trio launched CenDyne in 1999.
H. LORREN AU JR., THE ORANGE COUNTY REGISTER
--------------------------------------------------------------------------------
By TAMARA CHUANG
The Orange County Register
SANTA ANA - CenDyne Inc.'s three co-founders have resigned, and a Taiwanese investor has taken control as sales faltered.
Ed Meadows, CenDyne's president; Mo Vahdati, its chief executive; and Dean Vahdati, its chief operating officer, left the company last week for reasons not explained to employees, said Paul Goldberg, CenDyne's vice president of marketing.
Test Rite International Co. of Taipei, which invested $4.5 million and gained a 42 percent stake in CenDyne last year, named Gavin McCalla, CEO of its U.S. operations in Ontario, as CenDyne's new CEO. Another Test Rite executive, Bob Miles, is now CenDyne's chief financial officer. Neither was available for comment Tuesday.
The Santa Ana company, which sells CD burners and DVD drives, lowered its revenue projections in recent months.
CenDyne previously said it could bring in revenue of $100 million to $150 million this year with help from Test Rite, which assists retailers with packaging, design and logistics. The current revenue projection is for $95 million, up from $50 million last year, Meadows said in an interview last month.
Meadows blamed sluggish sales on the economy and the SARS virus, which slowed the manufacturing of CenDyne's drives in China. The downturn led Test Rite to demand changes, according to a July 31 report from the China Economic News Service. Test Rite blamed CenDyne's steep discounts to consumers and suppliers for its $17.5 million loss in the first half of this year. To stop the losses, Test Rite sued "for provisional confiscation of CenDyne assets," the report said.
"Test Rite has taken over the company," Goldberg said. "And we are pushing onward. There have been no layoffs and no substantial changes to the company aside from the departure of the top management people. We are still continuing on the same focus that we had before on DVD-RW optical drives."
CenDyne, which employs 72 people, was on the verge of releasing a suite of home entertainment products, including DVD players and personal video recorders. That's no longer planned, Goldberg said.
Mo Vahdati, reached Tuesday, said Test Rite was troubled by mail-in rebates that CenDyne offered. He declined to comment on his departure.
The company's three founders are entrenched in the optical drive business and already at work on something new, Vahdati said. The three men launched CenDyne in 1999 after leaving Hi-Val, another CD drive seller.
Analyst Wolfgang Schlichting at market researcher International Data Corp. said CenDyne's turmoil is typical of the optical drive industry.
"Companies come and go and change ownership," he said. "These companies live off their agility, their relationships with retailers and their ability to play the retail game - get in the market early when margins are high, manage inventory and get out before they start losing money."
Here's the key line in this, besides the obvious negative whenever a company is taken over..
"Mo Vahdati, reached Tuesday, said Test Rite was troubled by mail-in rebates that CenDyne offered. He declined to comment on his departure."
It's everyone's own decision, but seeing as how the company's new ceo and financial officer are from Test Rite, who cited deep discounts (read rebates) to consumers as the reason to blame for sluggish sales and actually sued cendyne because of this to acquire it's assets, I would think it a major gamble to go for any new cendyne manufacturer rebates beyond those you already have outstanding. No idea if this means they will up and not pay existing valid rebates. I actually don't think that will happen since a change of management doesn't give them legal grounds to dishonor existing payments/debts but who knows. I just can't see it as a safe bet to go out and do new cendyne deals/rebates. But YMMV I guess, not my money.
As an addendum.
In 2001 Cendyne acquired the exclusive verbatim license rights for optical products with the verbatim brand in north and south america.
Might wanna be weary of verbatim as well but again, just a heads up, do what ya will
http://www.oser.com/pdf/CEDN_Jan2003/CEDN_Jan2003_P73-80.pdf
I hope my $10 rebate for my 56k Modem is coming in soon. I already received an e-mail from Cendyne earlier this week that it will be in my mailbox in less than 30 days. Let's hope that rebate makes it!
-=MaStA ViC
I only have $50 (20 + 30) in outstanding rebates, and a friend has 20 due to the fabric chair/cdrw deal at OM recently. I've made it a point since something back in december to not have too many outstanding rebates with any one company. I admit that it concerns me a little, but, I'm not gonna sweat it too much either, as they still gotta pay their debts. If appointing a new ceo or financial officer absolved companies of their debts, they wouldn't ever declare bankruptcy afterall. What I am wondering is, with a new financial officer in place, how much will this deplay approval of funds to rebateshq/parago and others to pay out existing rebates. I just posted this as an FYI to those would do do new deals where cendyne rebates are concerned.Originally Posted by mastavic
FYI, if that email said something like:
Status: Processing Rebate
Status Detail: Your rebate is valid and is in the final stages of processing and should be sent to you within the next 30 days.
Then the 30 days means 100% nothing. When it mails is entirely dependent on when the sponsor of the rebate provides the funds. With Kingston Technology, they pay quickly, and it will usually mail in about 30 days. Officemax is around 5-8 weeks, logitech is slow as a mole's behind, it all varies. As a rule though, it's a useless indicator and is based on no actual mathematic/financial factors or previous performance, it would say that about the slowest of the slow where mfr's providing them with funds are concerned.
Thanks for the notes and heads up, Cpaladin =) I've been doing rebates for quite a while now (I've probably gotten back over a total of $500 worth of rebates), so I know pretty well how these companies work and which ones are usually the better ones. Personally, I like Staples and Office Max rebates the most. CenDyne isn't that great, Belkin is okay, Khypermedia is pretty bad, Optimum is horrible, Best Buy is good... and there are a lot of companies out there that just aren't that great =P
-=MaStA ViC
I'm surprised that they only employ 72 people. I know all they do is rebadge drives from other manufacturers, but still, I would think it takes more than 72 people to handle all the distribution, shipping, packaging, billing, and retailer contacts.
Posting Permissions
Reply With Quote
