Viking Eyeing Move Back to Aliso Viejo
By ANDREW SIMONS
Viking Components Inc. could move from its trendy Rancho Santa Margarita headquarters to a smaller facility in Aliso Viejo early next year, a company spokesman said.
The company’s current lease is up in March, and Viking officials are working to renegotiate the terms for their current 150,000-square-foot facility, which includes test and assembly operations.
Viking, a maker of computer-memory products, isn’t using the top floor of the facility after laying off workers earlier this year. Company officials are looking to cut a deal for less space and money at the Avenida de las Banderas site.
“But we have an offer for a really nice facility in Aliso Viejo,” said Michael Nubel, Viking’s marketing and sales vice president. “If we can’t reach an amicable agreement, we’ll move.”
Viking originally moved from Aliso Viejo to Rancho Santa Margarita in 1997 to be close to nice neighborhoods, good schools and freeways, according to company officials. Many of Viking’s employees live in or near the area.
At 80,000 square feet, the Aliso Viejo facility Viking is considering would be almost half the size of its Rancho Santa Margarita building. Real estate brokerage CB Richard Ellis Services Inc. already has put an “available” sign outside Viking’s headquarters.
Like other memory companies, Viking is grappling with slimming profits and a large inventory of memory boards, thanks to the downturn in the computers and networking gear sectors. Industry observers contend another shakeout is inevitable in the memory business.
Viking has tried to offset lower sales by cutting expenses. Company officials have said for several months they hope to pay less for their current real estate or find cheaper facilities elsewhere.
Earlier this year, Viking stepped up production of its most generic line of memory boards at its Ireland plant in a bid to offset price declines with higher volume.
Viking also has shelved plans for an initial public stock offering. This summer, the company hired Los Angeles investment bank Murphy Noell Capital LLC to help evaluate strategic alternatives. Santa Ana-based memory maker SimpleTech Inc. had been weighing a bid for Viking, but said it has pulled back from any deals in the wake of Sept. 11.
Instead, Viking has taken out a credit line with CIT Business Credit, part of the financial services arm of Tyco International Ltd. The financing should help Viking go it alone, according to founder and co-chief executive Glenn McCusker.
“A lot of companies came to look at us,” McCusker said. “What I found through this whole exercise is that we’re a strong company.”
Analysts are predicting consolidation in the memory business.
“The industry has already lost the momentum to sustain positive revenue growth this year and in 2002, as the market enters an earlier-than-expected bust cycle,” International Data Corp. analyst Soo Kyoum Kim said earlier this year. “The stage is set for another market restructuring, with the winners and losers clearly being identified over the next year.”
Like the broader technology sector, the memory market goes through ups and downs, with periods of rapid growth followed by contraction. As computer sales plunged in the past year, memory companies have been forced to cut prices,and forsake profits,on memory modules, the circuit boards that house memory chips.
