Komag, which makes magnetic platters that record information inside disk drives, also said it expected to record a one-time charge of $135 million to $185 million in the second quarter ending June 28.

In addition, Komag, based in San Jose, California, said the loss and the charge meant that the company would be in a technical default on its bank loans and credit lines by the end of the quarter. The company will have to renegotiate with its lenders, executives said.

Komag, whose fortunes are closely tied to the disk drive industry, had expected sales to recover in the second half of 1998 after a world-wide glut of disk drives. But the company now expects weak disk-drive sales into 1999, leading to the layoffs in its United States and Malaysian operations.

In addition, diskdrive makers are using fewer components in the their products, or making more of the components themselves, hurting suppliers like Komag.

Sales for the quarter are expected to be about $75 million to $85 million, down 57 per cent from the $175.1 million reported in the June quarter of 1997. The loss, excluding the charge, is expected to be about $58 million, or $1.10 a share.

Wall Street had expected Komag to report a loss of 62 cents a share, according to a recent analyst survey by Zacks Investment Research.

To cut costs, Komag will close a plant in San Jose, its oldest. In addition, it will limit its capital expenditures in the second half of 1998 to about $15 million. It will also lower the value of some of its assets on its financial books.The company now expects to return to profit in the first half of 1999, about six months later than it had previously forecast.

(Reuters)