Turn Around at Smith-Corona

To outsiders, the venerable typewriter-making firm of Smith-Corona, with steady sales and respectable earnings, appeared to be doing quite well during the mid-50s. Insiders knew better. Other typewriter makers were diversifying into the promising fields of business machines and computers while Smith-Corona lagged behind. Its dominance of the portable market was being challenged by low-priced and well-designed foreign machines.

Six years ago the directors decided to take a chance, even if it meant temporarily running in the red, on spending money to develop new products and to get a younger management.

Last week, as the company's new 44-year-old president, Emerson E. ("Bud") Mead, estimated third-quarter earnings, the gamble seemed to be paying off. Though slim, the earnings were a great improvement over the $426,000 loss in the period a year ago. For the fiscal year ending June 30, the company is expected to have sales exceeding last year's record $93 million and earnings of about $900,000, or 50-c- a share, v. a $2,200,000 loss last year.

The 200. Much of the success is owed to a small new electric typewriter, the 200, which is priced low enough ($225) to compete with standard manual machines. The new machine has spurred a 300% increase in Smith-Corona electric typewriter sales and is one reason why electric typewriters have recently for the first time outsold standard manual machines in the U.S. market.

Smith-Corona's turn-around year of 1956 got under way when the University of Pittsburgh's Chancellor Edward H. Litchfield joined the board, and Smith-Corona acquired the Kleinschmidt Laboratories, a small, hustling outfit specializing in communications systems and related research. Bud Mead, who was executive vice president of Kleinschmidt, became vice president for operations for Smith-Corona and began to shake up the company. He mechanized assembly lines, closed antiquated production facilities, and built a new $2,000,000 factory in South Cortland, N.Y. Mead estimates that the company's typewriter-production capacity is now 20% greater even though it employs 1,000 fewer workers.

The company's expenditure on research and product development was increased from 3% to 5% of gross sales. As sales rose sharply through mergers and diversification, the research outlay has more than tripled to $4,500,000 a year.

Rising Profits. A merger in 1958 with the Marchant Co., a maker of calculators and adding machines, helped Mead fill out a compact line of office equipment and brought a change in the corporate name to Smith-Corona Marchant. Out came a stream of new products. Among them: a new line of small calculators, and two compact, electronic business machines--the Typetronic 2215 and 6615--which are basically educated typewriters. Linked to either a punch taper or a computer, they can do such tasks as filling out orders and calculating accounts. Smith-Corona also will have on the market within a year a photo copier that may turn out to be its hottest product yet: a desktop size, electrostatic model, which will reproduce letters on dry, coated paper in less than three seconds at a cost of only 3 1/2-c--4-c- per sheet. It will probably be priced around $700, far less expensive than bulkier dry-copy models. With such new products on the way, Mead expects sales in the fiscal year beginning June 30 to reach $103 million and earnings to hit more than $1 a share.

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