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Like other computer companies, Cardinal Technologies Inc. has seen its growth become grounded by plummeting equipment prices.
But the company expects its sales and profits will take off again soon, propelled by demand so strong that Cardinal recently made its millionth modem.
"We've had to run faster to stay just where we were. We're a year behind where we thought we'd be two years ago, from a revenue standpoint," said president Harold R. Krall.
Krall estimated Cardinal's 1992 sales at nearly $50 million "a little more" than 1991 "but less than we expected, because prices dropped so much."
"On a unit basis, we've had a lot of growth. In the computer business, prices are down 35 to 40 percent from a year ago. So we've had to make almost twice as many just to stay where we are," Krall said.
Price declines as rapid as 5 to 10 percent a month made profitability elusive, Krall explained, because prices were eroding too fast for computer makers to earn an adequate return.
"In the last 18 months or so, the industry has gone through a meltdown. By the time you order the materials, process the materials, ship it and get paid, there's been a deterioration," he said.
Cutting prices was a sort of necessary evil for the computer industry, an unpleasant but effective antidote to the recession, which stifled demand in many other industries, Krall observed.
"The computer industry dropped prices dramatically, and that kept demand going. The industry probably did the right thing, but everybody got hurt," Krall said.
While Cardinal is currently...