The little company that wants to quiet the world made some noise of its own recently.
It came in the form of a boardroom eruption.
When the top management of Noise Cancellation Technologies Inc. reported a second-quarter loss of $4.4 million 50 percent below projections it was more than the outside directors could tolerate.
The dismal results were just the latest in a string of failures to meet forecasts, and they extended losses that have troubled the company since its formation in 1988.
Last year, the company, which has its research facility in Linthicum, posted a net loss of $17.2 million and total revenues of $5.4 million. The six months that ended June 30 offered no promise of improvement. NCT, as it is commonly called by company officials, reported a loss of $8.5 million on revenues of $3.4 million.
NCT's stock has responded accordingly. Shareholders have seen the value of their investment fall to 70 cents a share from more than $5 in the spring of 1992. Marylanders hold about 20 percent of the shares.
Directors make move
Convinced that the company's survival was at stake, the four outside directors last month made their move. They took control of the company, appointed their own boss and shook up the top management.
Four of the six top officers of NCT were either demoted or are no longer with the company.
They include:
* John J. McCloy II, chairman and chief executive, who became co-chairman.
* Michael J. Parrella, president, who fell a notch to executive vice president.
* Joseph C. Dolan, senior vice president and chief financial officer, who resigned.
* John B. Horton, another senior vice president who served as general counsel and secretary. He also resigned.
Sixty of NCT's 173 workers, many of whom worked at the Linthicum research and development plant off West Nursery Road, also were released, and the board decided to shift corporate headquarters to Linthicum from Stamford, Conn.
"Something had to change," said Jay M. Haft, the 59-year-old lawyer and director who emerged as NCT's new, although temporary, co-chairman, president and chief executive.
"We were not performing as a management team," Mr. Haft said in a recent interview. "And our technology is so valuable and the potential for this company in the future is so bright that it would have been suicide to continue on the same path."
Duplicating sound waves
NCT's technology involves electronic equipment that can analyze noise and produce a mirror opposite of the sound waves. When the opposite sound waves are directed at the original noise, the two cancel out each other. The same principle is used to eliminate vibrations.
Engineers at Walker Manufacturing Co., the auto exhaust division of Tenneco Inc., are seeking to apply the technology to the development of an electronic muffler.
The company already makes headsets to eliminate the noise of magnetic resonance imaging scanners and is looking at eliminating the noise of home vacuum cleaners and electric fans.
Its first consumer product, a headset called NoiseBuster retailing for about $150, is designed to allow users to conduct normal conversations or listen to music without the disruptive background rumble of lawn mowers, jets or traffic.
The job of turning the technology into other products now rests with Mr. Haft, who describes himself as "an old workhorse who has been around for some time" but who insists he doesn't want a permanent position as CEO.
"I'm ready to step out of the picture as soon as I think we have put together the right team and we are on the right track," said Mr. Haft. "We're looking for a permanent CEO with the background and experience to really drive this company forward . . . on a profitable path."
He hopes to hire a new chief executive within the next six to nine months.
Mr. Haft said he will be looking for someone with a history as a successful operations officer of a technology driven company. The right person, he said, should have a financial background but still be able to understand the company's technology and be able to apply it to the development of new products.
He flashes a slight grin and adds, "That's a stringent set of requirements, but these people do exist."
Mr. Haft said the board moved after concluding that Mr. McCloy and Mr. Parrella had not proved they could manage the finances and the operations of the company in such a way as to bring it to stable and profitable status within a reasonable period of time.
He continued: "Sure, Mr. Parrella thought he could handle things with some guidance from the board. Sure, Mr. McCloy thought he could handle things with some guidance. But we didn't think that was a possibility."
Poor management structure
While he declined to confirm outside reports of a power struggle for control of the company between Mr. McCloy and Mr. Parrella, Mr. Haft admitted that NCT suffered from a poor management structure in which the two top executives had significant authority but were more or less equals in the company.
"You can't have a horse with two heads," he said.
He said the process of making the management shifts involved some "long and arduous" board meeting, but eventually everyone, including Mr. McCloy and Mr. Parrella, agreed on the moves taken.
"At the end of the meeting every director, including the people who ran the company to date, agreed that we had to do something" about the company's troubles "and we had to do something about it now."
While Mr. Haft says that both Mr. McCloy, who has served as chairman and CEO since 1987, and Mr. Parrella, president and chief operating officer since 1988, are candidates for the top job, he believes that the new head of NCT will come from outside the company.
Cautious optimism
Mr. Haft believes the company will survive, but also adds: "I can't guarantee it, but I think so."
Thomas T. Taylor, head of Chesapeake Research Inc., a Towson based brokerage house that specializes in mid-Atlantic companies, is even less optimistic.
He compared Mr. Haft to the captain of the Titanic.
The company's hope, he said, may rest on its ability to bring
three new products, each capable of generating $20 million in annual revenues, to the market within the next six months.
PRODUCT DEVELOPMENTS
Products in development or being produced by Noise Cancellation Technologies Inc.
* Electronic muffler, in conjunction with a unit of Tenneco Inc., that will increase a vehicle's power and fuel mileage.
* Headsets designed to reduce patient stress by eliminating the noise of magnetic resonance imaging (MRI) equipment and replacing it with music.
* Unit to quiet kitchen hood fans. It will allow for the installation of a more energy-efficient fan that would otherwise be noisier. It can also be applied to vacuum cleaners.
* Equipment to reduce the noise in the passenger compartment of jetliners and smaller corporate aircraft.
* In conjunction with Baltimore Gas & Electric Co., units to reduce the noise of power transformers located near residential areas.
* NoiseBuster, NCT's first consumer product, a headset designed to cancel out background noise but allow users to carry on normal conversations or listen to music.
* Industrial headsets used to reduce factory noise.
* NoiseEater, a noise reduction unit designed to be installed in existing heating, ventilating and air conditioning ducts at
commercial and industrial sites.