Cash shortage sends APS into Chapter 11

Longtime Mac storage vendor Alliance Peripheral Systems Inc., more commonly known as APS Technologies Inc., yesterday filed for Chapter 11 federal bankruptcy protection.

The Kansas City, Mo., company said it suffered a cash crunch following the bankruptcy of hard drive maker Micropolis Corp. in November 1997 (see 11.17.97, Page 3). APS offered a variety of high-performance Micropolis mechanisms under the APS brand. APS Executive Vice President Paul McGraw said Micropolis owes the company almost $7 million and was the drive manufacturer's largest creditor.

"The question is cash, not profitability," McGraw said. "We're very profitable, but cash is what it takes for a low-margin business to keep products moving."

APS will continue to operate its mail-order peripherals business, McGraw said, and expects no layoffs. "Our ability to ship products to customers should actually be better," he said.

McGraw said the company's cash position was also squeezed by Apple's cancellation of Mac OS licensing just a few months after APS rolled out its line of M*Power clones in March 1997. "We spent millions on inventory and marketing that suddenly became essentially valueless," he said.

Meanwhile, APS will continue to service its Micropolis drives under warranty. The company has contracted to service the drives, McGraw said, although he warned that users should expect "some time" before fixed mechanisms can be returned.