Dated, but useful, interview with Chairman & CEO of DMIC,
@ Wall Street Corporate Reporter, Inc. site...
see wscr.com for complete article.
Technology
"Last year, we were working on completely revamping the information systems in the company, but that initiative was put on hold when the downturn occurred. Before the drop in business, we needed to revamp the information systems because we were growing rapidly and approaching a size that was beginning to stretch the information resources of the company. However, in the last couple of months, because of our renewed enthusiasm and confidence about where the company is going, we decided to resume the implementation of those systems.
"We are now in the process of rolling out a complete global information system throughout the company. That system will extend from the customer information side to order input, inventory management, sales, support and service. In fact, we expect to have the first phase of that effort complete by the fall of this year company-wide, and add additional functionality over the next nine to 12 months. That, in itself, I believe will have a very positive impact on the company's effectiveness in using information to move more quickly than we do today. In fact, we are already known in the industry as being very responsive and quick."
Strategy
"Our company is particularly strong in the mobile wireless market, and our belief from everything we see is that it will continue to be a huge market and get even larger going forward. There are a number of reasons for that, including the fact that the penetration of mobile cellular operators is very low worldwide and, even with the prevalence of mobile telephones today, a tremendous amount of buildout is going to occur. The other reason is that the systems that are out there today have increasing needs for higher bandwidth with Internet access, and so the cellular equipment suppliers are developing new third-generation systems that have much higher capacity. Our new products very much match that technology, and we expect that to be a whole new wave of buildout that will occur.
"In fact, we are very bullish in the cellular market and very strong in it as well. In addition to that, the fixed wireless market that is using wireless to provide fixed telephone and data service is just emerging. A number of the products that we have designed were specifically designed to match that market, and we think that is going to be another huge market that never existed before in any significant way for the company. We have structured the company in a way to have a good focus on both the mobile and fixed markets to make sure that we serve both very well. In fact, I expect that as both these markets come on stream and grow, we are going to be a huge beneficiary of that growth because of the products and market position we have now."
Cash and credit
"Because of the way the company is managed, we have gotten strong marks on how we manage our balance sheet. When the crisis hit in Asia one and a half years ago, that could have created a significant liquidity crisis for any company and especially for one of our size. However, we have always had a strong focus on managing receivables, inventory and cash, at least since the current management team has been here, and that paid off well during the crisis. Obviously, when you go from record profits to record losses that is going to strain the balance sheet. It certainly put some strain on ours, but remarkably through the whole thing, we never had to borrow any money.
"In fact, we secured a new credit facility during the middle of the crisis and have never really had to use it. Coming out of that crisis, our confidence is pretty high that we are going to start building cash, and we also have some aggressive plans for the company going forward. We recently announced that we
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"Our company is particularly strong in the mobile wireless market, and our belief from everything we see is that it will continue to be a huge market and get even larger going forward."
— CHARLES D. KISSNER
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were filing a $100 million shelf registration with the SEC. We do not expect to take down the whole $100 million at any single point in time, but as cash needs arise, we believe that we will have access to a number of equity and debt financing vehicles that are being presented to us. The bottom line is that we have managed the cash and balance sheet of the company so strongly that we now have many opportunities to raise cash should we need it to carry out our plan."
An international company
"Traditionally we have largely been an international company with more than 90% of our sales outside the U.S. One of the major reasons for that has not been a lack of attention to the U.S., but it has been a result of the fact that most of the demand for products like ours have been in places that don't have infrastructure in place, and that is largely in areas outside the United States. However, the fixed wireless access market, at least at this stage, is largely a U.S. phenomenon, and, because we have focused some products on that particular area, most people are not aware that we are one of the most significant suppliers to the U.S. for the fixed wireless access market. We intend to capitalize on that and grow quickly.
"In fact, we are already seeing the results. For example, about 20% of our backlog at the end of last quarter was for the U.S. and that is higher than it has been in the recent history of the company. Actually, the new Altium radio, which I mentioned earlier, has even a higher portion of its backlog in the U.S., so it is very clear that we are making a great deal of progress in being successful in a new and emerging market. Although over the long-term I do still expect the majority of our business to be outside the U.S., I think that the U.S. is going to experience very strong growth for Digital Microwave as well."
Most important decision
"The most important decision we had to make in the past year was the decision to completely redefine the company as rapidly as possible and do an acquisition at the same time. At the time, I knew that was a risky thing to do, but I felt that it was even riskier to not be decisive. That decision to be aggressive was extremely critical to the future of the company and obviously caused a few sleepless nights, but I am very happy with the results of it. In fact, we have gotten pretty good marks for execution on a tough restructuring.
"Certainly, there was universal acceptance that we needed to cut costs and, in fact, we wound up reducing our workforce by about 35% last year, which is fairly aggressive by any measure. At the time we did the last acquisition, it was considered somewhat gutsy and although most analysts thought it was a good move strategically, some wondered whether we could actually execute on it given all of the turmoil that was going on. More recently, however, we seem to have almost universal praise from the analysts with regard to how those acquisitions have worked out in the midst of everything."
Digital Microwave Corporation
170 Rose Orchard Way
San Jose, CA 95134
408-943-0777
408-944-1648 FAX
Regards,
Mardy. |
