![]() ![]() Instead of reporting this, a number of the managers decided to cover it up by various means. This implied the cost to produce those drives that did sell was higher than initially thought, which, if properly booked against sales, would mean their operating margins would be unimpressive. ![]() Their internal inventory count showed that there was a shortfall of between $2 and $4 million. In January 1987, the company officers conducted a quick inventory to estimate their accounts prior to an independent review by third party accounting firm Coopers & Lybrand. Their major customer at this time was Compaq, but the company was also bidding for major contracts with Apple Computer and Digital Equipment Corporation (DEC). The company soon returned to profitability, with sales increasing from $114 million at the height of IBM's orders, to $603 million by 1988, when they were named the most well-managed company in the disk drive industry. Wiles took over the CEO position from Gower, running the company remotely from his office in Sherman Oaks, Los Angeles, with a management team made up primarily of accountants. One of H&Q's officers was Quentin Thomas ("QT") Wiles, a turnaround specialist nicknamed "Dr. Shortly thereafter the company was recapitalized with a $20 million investment from Hambrecht & Quist (H&Q), a venture capital firm. Johnson would later comment that "It's a very low inertia industry, you can blow your way into it and get blown out of it very quickly." Roger Gower, who had been recently promoted to President, took over the CEO role as well. Johnson left the company at the time he stated that he had been planning to do this for some time and that his departure had "absolutely nothing" to do with IBM. However, slow sales of the IBM PC/XT led IBM to dramatically scale back their orders late that year, forcing MiniScribe to lay off 26% of its staff and causing the value of the stock to plummet. ![]() MiniScribe became a major player when it won a series of contracts to supply IBM's PC division, and their subsequent rapid growth led to an initial public offering in late 1983, opening for trading in January 1984. The company was started by Terry Johnson, who had a 20-year career in the hard drive business at such companies as IBM, Memorex and Storage Technology Corporation. A 44 MB, 5.25-inch full-height MiniScribe hard disk, shown with a more recent 2 GB CompactFlash memory card for size comparison ![]()
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