Cerplex to Cut Back, Set Up $22-Million Hedge

TUSTIN — Cerplex Group Inc., an electronics-repair company, said Thursday that it will discontinue a segment of its business and set up reserves against possible losses stemming from a “significant” customer that is in bankruptcy.

In a prepared statement released after the stock market closed, Cerplex said it will provide $22 million in reserves and write-offs on inventories and other assets for the current quarter. It did not estimate its quarterly results.

Because the announcement came after Nasdaq trading, it didn’t affect Cerplex’s stock, which rose 12.5 cents to close at $5.50 a share.

The company is halting its end-of-life services, in which Cerplex assumes all responsibilities for the support and repair of products that are no longer manufactured or are being phased out of manufacturing. Revenue from such services has fallen from $55 million two years ago to about $20 million this year, thus hurting profit margins.

In addition, a major customer, SpectraVision, has been operating under a Chapter 11 bankruptcy petition, and its failure to pay in past quarters has been a drag on Cerplex earnings.

The Tustin company earned $700,000 last year, well below its prior-year profit of $5.6 million. Its annual revenue had soared to $126.9 million last year, from $78.9 million.