Itel Corp., the deeply troubled San Francisco leasing company, said yesterday that the third quarter results would include $150 million in write downs and loss reserves not previously announced.
Itel predicted the total loss for the third quarter would be about $175 million.
The company, which grew from zero sales to nearly $1 billion in a dozen years, has suffered from disasterious losses in the computer leasing business.
Trading in Itel's stock in the New York Stock Exchange was delayed yesterday pending the announcement. The stock, which has traded at better than $28 a share during the past year closed yesterday at $4.50.
Only last year, more than two-thirds of Itel's revenues came from leasing computers. Itel now says it will concentrate on other areas of its business, such as rail car and container leasing.
Itel's current woes stem in part from 1974 agreements it entered into with Hitachi and National Semiconductor Corp. to market their computers.
In January of this year, IBM rocked the industry by annoucing its new 4300 series of computers. This new line is faster, more powerful and up to 30 percent cheaper than any other computers already on the market.
Itel, to its chagrin, had accumulated massive inventories of the slower Hitachi and NSC models. With buyers turning to the new IBM line, Itel has had to record major losses.
On Oct. 1, it transferred much of its conputer marketing operation to NSC. This and other related actions had led to the write down of assets "associated with this activity to estimated liquidation value," the company has also created reserves to cover estimated future losses.
In 1974, Lloyds of London created an insurance policy that greatly enhanced Itel's leasing operation. In essence, the policy insured Itel and other leasing companies against liability when computer users cancelled their leases.
There have been massive cancellations since the new IBM line was announced as users switch to the faster, cheaper models.
Lloyds has been slow to pay off the claims, which are still being filed. Itel is the biggest user of the Lloyds policy among leasing companies, and its been estimated that claims from Itel alone could amount to $180 million.
Itel was the creation of a hard-driving chief executive, Peter S. Redfield, who put together an aggressive team of high pressure salesmen.
Redfield, 47, was ousted as president last summer by lenders who have huge amounts of credit extended to the one-time high flying company.
As of June 30, Itel owed $1.2 billion to banks and insurance companies as well as bond-and stockholders.