Noise Cancellation shakes up its management

November 22, 1994|By Ted Shelsby | Ted Shelsby,Sun Staff Writer

Noise Cancellation Technologies Inc., a small technology company that hasn't posted a profitable quarter in the 1990s, announced a shakeup of its top management yesterday aimed at reversing its financial plight.

As part of the restructuring, the Stamford, Conn.-based company said it would consolidate a substantial part of its corporate operations at its Linthicum production and research facilities. Company officials were en route from Stamford to Linthicum last night and could not be reached for comment.

The most dramatic step in the restructuring of the noise abatement company was the appointment of Jay M. Haft, a lawyer and a director of Noise Cancellation since 1990, as co-chairman of the board, chief executive officer and president.

He replaces John J. McCloy II, the former chairman and CEO, who will become co-chairman, and Michael J. Parrella, the former president, will now serve as executive vice president. Stephen J. Fogarty, former senior vice president of operations, will serve as chief financial officer. He replaces Joseph C. Dolan, who has resigned.

The sweeping changes came as the company reported a third-quarter loss of $5.9 million. Over the past 17 months, Noise Cancellation's stock has fallen from $4.80 a share to close yesterday at 87.5 cents, down 12.5 cents for the day.

Mr. Haft, a lawyer since 1959, said in a prepared statement that his objectives will be to implement the corporate reorganization, to focus the company on profitability and to hire a permanent chief executive officer.

A goal of the new business plan, Mr. Haft said, is "to lead the company to break-even operating results by the end of 1995."

Noise Cancellation's primary product is a noise-reduction system that makes use of computer technology to analyze selected sounds. Based on that analysis, the system produces an equal but opposite sound wave, called "anti-noise," which cancels out or reduces the unwanted sound.

The technology has captured the attention of some of the world's biggest companies but has yet to pay off for investors.

Noise Cancellation has been working with Walker Manufacturing -- a unit of Tenneco Inc. in Racine, Wis., that is the largest U.S. producer of exhaust systems for new cars -- on an electric muffler.

Noise Cancellation has claimed the device would boost the fuel efficiency and horsepower of cars, but so far the market has not developed.

Several years ago it formed a consortium with electric utilities, including Baltimore Gas and Electric Co., to produce and market equipment to silence power transformers. The company boasted that this had the potential of being a $2 billion to $3 billion market in the the United States alone.

But as losses have mounted, the company has reduced its worldwide work force from 173 to 113.

The third-quarter loss was equal to 7 cents a share, compared to a deficit of $3.5 million, or 5 cents a share, in the same period last year. Revenues totaled $2.7 million, up from $1.1 million in 1993.

For the first nine months of the year, Noise Cancellation posted a loss of $14.5 million, or 18 cents a share, on revenues of $6 million. During the same period of 1993 it posted a loss of $9 million, or 13 cents a share, on revenues of $3.9 million.

Noise Cancellation also announced that engineering administration operations in Linthicum have been consolidated under Roger Keller, senior vice president.

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