Dividends: New Woes for Coleco

The planned invasion was as bold as any in a Coleco Industries video game. The strategy called for Coleco to blast its way into the home-computer market with Adam, a complete system that sold for just $600. But the Adam onslaught never really got rolling. During 1983 production problems forced Coleco to manufacture less than 20% of the 500,000 computers it had planned. Last week the firm revealed that Adam is causing a hemorrhage of cash. Coleco reported a $35 million loss for the fourth quarter of 1983, against a profit of $15.4 million during the same period a year earlier.

Executives of the West Hartford, Conn., company had expected the Adam to be a hot seller, but quality defects have chilled sales and caused customers to return up to 30% of the computers. And while Coleco's Cabbage Patch Kids remain a huge hit, some analysts now believe that the firm will have to discontinue Adam in order to stem its losses.