Computers: Coleco Pulls the Plug

Shortly before Connecticut-based Coleco Industries introduced its Adam home computer in June 1983, the company’s stock shot up ten points in a week, going from $41 to $51. The product looked like a winner. It would cost only $600 at a time when comparable equipment sold for about twice as much. With a gentle jab at a competitor, Adam was going to bite the Apple. But sales foundered when the machine turned out to be plagued with glitches. Even a price cut to $499 and several new features were not enough to save the product. Coleco President Arnold Greenberg last week announced that the company was dropping Adam, leaving the low-priced end of the computer market to Commodore and Atari.

Adam has made life tough for Coleco. The company will take an estimated $110 million write-off against 1984 earnings because of the flop. Indeed, Adam might have driven Coleco to its knees were it not for the company’s success with another product: the Cabbage Patch Kids. Coleco last year sold $500 million worth of Cabbage Patcheria, and the pudgy dolls have been the hottest toys for the past two Christmas seasons. Coleco hopes that it will now do better by staying in the cabbage patch.