To some, Irvine-based telescope maker Meade Instruments Corp. has lost its focus.
The maker of telescopes, binoculars and microscopes has been dogged by supply issues since moving the last of its manufacturing from Ir-vine to Mexico earlier this year.
Last month, Meade reported a 32% drop in sales from a year earlier to $12 million for the three months through May.
Meade, which boomed in the 1990s as the largest maker of telescopes, has seen its shares fall about 80% from last year’s high, giving it a recent market value of about $15 million.
The company faces the threat of delisting from Nasdaq after its shares have traded for less than $1 for 30 straight days. It has 180 days to boost its share price.
In the past year, Meade’s stock has traded for 57 cents to $2.30.
“I have often said that Meade has a three- to five-year turnaround,” said Steve Muellner, Meade’s chief executive, during a June conference call. “We are just now entering year three.”
Some familiar with the company speculate Meade could be bought and taken private, particularly as it looks for “strategic alternatives.”
Executives at Meade weren’t available for comment.
Muellner was hired more than a year ago to help a company that had been suffering from weak sales, most notably from its expansion into riflescopes.
Muellner, an avid hunter and formerly president of Moorpark-based sporting goods maker Variflex Inc.,which is now part of Santa Fe Springs’ Bravo Sports,sold the riflescope brands to generate cash and restructure Meade’s credit.
In April, Meade sold its Weaver and Redfield Sport Optics riflescope brands for $8 million. In June, it sold Simmons Outdoor Corp., another riflescope brand, for about $7 million.
Meanwhile, Meade’s sales continue to slide from what it says is general weakness among retailers.
Half of its business is done in the U.S. and half internationally.
The company is showing some signs of progress: It posted a profit of $1.8 million for the three months through May, versus a loss of $4.2 million a year earlier.
But “we will have another tough year ahead of us,” Muellner said on the conference call.
Meade’s struggled with a $3 million backlog created from interrupted production with its manufacturing move to Mexico from Irvine.
Even with the production delays, the company said cost savings have begun to kick in.
Meade expected the move to save about $10 million a year after it laid off 120 factory workers in Irvine last fall.
In the past two years the company has cut its workforce in half to 250. Less than 50 work at its Irvine headquarters now.
Meade’s competition comes mostly from Torrance-based Celestron LLC. It also competes with San Clemente-based Vixen Optics, part of MrStarGuy Inc.
In 2005, the Federal Trade Commission blocked a bid by Meade to buy Celestron, saying the combined company would have been too dominant. It was the third time in 15 years that regulators blocked a combination of the two.
Meade’s Fall, Rise
Craig Weatherwax of Oceanside-based Oceanside Photo & Telescope Inc. said that five years ago about 50% of the telescopes he sold were from Meade. That’s come down to about 10%, or $1.7 million of his sales, he said.
Meade got off its game when it started dealing with riflescopes, Weatherwax contends. The company could rebound when its production issues are cleared up and it focuses exclusively on telescopes, he said.
“They have a tremendous name in the industry,” Weatherwax said. “Hopefully the restructuring will bring it back.”
Meade shareholder Scott Roberts, a former vice president with the company, said he sees potential despite the current problems.
“They’re the envy in the industry with their marketing and sales force,” he said.
After working at Meade for more than 20 years, Roberts left to start his own telescope company, Laguna Hills-based Explore Scientific LLC, which expects to have its first product out this fall.
Explore Scientific was started with money from Hong Kong investors and will make its telescopes in China for the mass market.
Roberts wants to make telescopes for amateur astronomers and will compete directly with Meade with its models ranging in price from $600 to $3,000.
