Press Release:
Camarillo, Calif.-Based Tech Company Fights Back after Scandal
Sep 29, 2002 (Ventura County Star - Knight Ridder/Tribune Business News via
COMTEX) -- From the depths of financial scandal about a year and half ago,
California Amplifier Inc. has fought its way back to the top.
Earlier this month, the Camarillo company was ranked No. 2 on Business 2.0
magazine's list of fastest-growing technology companies, beating more
high-profile companies such as No. 3 e-Bay, No. 22 Siebel Systems and No. 37
PeopleSoft. Business 2.0, published by The Fortune Group at Time Inc., based its
rankings on 12-month stock market return, revenue, earnings and operating cash
flow for the last three years.
California Amplifier's revenues jumped 46 percent last year to a record $125
million, with net income of $5.2 million. The company, which makes equipment for
satellite television and wireless systems, also announced this month it beat
Wall Street expectations with earnings of 12 cents per share -- 3 cents higher
than analysts' estimated -- for the quarter ended Aug. 31. It was the 11th
consecutive quarter of posting a profit.
Revenues for the quarter were up 22 percent from the previous quarter, in
contrast to many technology manufacturers that are struggling to hold their own
in a sluggish economy.
"They've cleaned up their act," said Steven Hammer, president of Capital
Management Inc., a registered investment advisers firm in Santa Barbara.
"And that 22 percent certainly looks good."
Ventura investment adviser and financial planner Stephen Wagner said California
Amplifier (Nasdaq: CAMP) regained investors' confidence by taking quick action
early in 2001 when it was discovered the company's former comptroller had been
cooking the books.
"To their credit, they took responsibility for what happened and didn't try to
hide anything," said Wagner, owner of Stephen H. Wagner, CFP.
California Amplifier's attitude about corporate responsibility is even more
appealing to investors when compared with how executives handled recent
financial scandals at companies like Enron Corp., Arthur Andersen and Adelphia
Communications.
Investors also appreciate that the Camarillo company is making money and has
positioned itself to benefit from increased consumer demand for satellite
television and high-speed wireless broadband connections, Wagner said.
Still, California Amplifier's shares traded in the $3.50 range last week, off of
a 52-week high of $7.49. "If we weren't in such a down market, their shares
would be higher," Wagner said. "They've beaten earnings estimates for several
quarters now and they are poised to take off when the economy bounces back,"
Wagner said.
Repairing damage took time California Amplifier was founded in 1981 and has been
publicly traded since 1983. It makes amplifiers, antennas, receivers, converters
and other equipment for satellite television systems, wireless cable and
wireless broadband access systems. lt also makes a signal scrambling system that
prevents unauthorized viewing of cable TV programming.
Repairing the company's image has been a time-consuming, but necessary job, said
President and CEO Fred Sturm.
"We had to build our credibility back up, and we think we have done that," he
said.
When California Amplifier learned that its former comptroller had deliberately
understated the net loss for fiscal 2000 by about $3.7 million and overstated
net income by about $1.8 million, the company immediately launched an internal
investigation and reported itself to regulatory authorities.
Trading of California Ampilifier's stock was blocked by Nasdaq for two months
while the company sorted things out. The company subsequently re-audited and
re-filed seven quarterly financial reports, two more than required. The company
also paid $1.5 million to settle 20 class action lawsuits stemming from the
financial scandal, and the chief financial officer, who supervised the
comptroller, resigned.
With its financial house in order, California Amplifier is focused on growing
its business, Sturm said. Currently, satellite television equipment accounts for
about 90 percent of the company's sales. Consumer demand for satellite
television has increased steadily over the last 10 years, a trend that shows no
sign of slowing.
"As long as (satellite TV programming providers) DirecTV and Dish Network
continue to add subscribers, we see the opportunity for revenue growth," Sturm
said.
In addition to making receivers and other equipment new satellite TV subscribers
need, California Amplifier sees opportunities for new revenue sources by
developing multisatellite reception and multiroom distribution technology, Sturm
said.
"We are always putting more electronics into our products," Sturm said. "We want
to add more value to our products."
As for the broadband wireless access side of its business, product demand has
not grown as fast as some experts predicted due to the slow economy.
California Amplifier, however, is convinced demand will grow as the economy
bounces back.
"There are significant portions of the country that are underserved by wireless
broadband providers," said Greg Dare, manager of marketing communications for
California Amplifier. "Unfortunately, we're now in a period where companies that
have a good strategy (for providing wireless broadband service) don't have
access to capital."
The wireless broadband market may take a 12 to 24 months to make significant
gains. When it does, California Amplifier will be ready, Dare said.
California Amplifier will continue relying on acquiring other companies to grow
its business, but is only interested in firms that can improve the bottom line
immediately, Sturm said.
"We're always evaluating options," he said. "We look for an acquisition that
would be immediately accretive to earnings," Sturm said. "Lots of times a
company that acquires another company is taking on a project. We're not looking
for projects."
California Amplifier's $22 million acquisition in April of Kaul-Tronics, a
satellite dish manufacturer, strengthened the company's position in the
satellite TV market.
"It put us closer to the end user and broadened our distribution channel," Sturm
said.
Even though sales are increasing, California Amplifier has has no plans to
significantly increase its work force. The company has about 500 workers,
including 350 in Camarillo. The company also has design facilities in Texas and
Minnesota, as well as sales offices in France and Brazil.
"We adjust employment up and down with production volume," Sturm said. "We don't
see any dramatic increases in hiring any time soon."
Increases in sales and profits are another matter. Sturm expects the top and
bottom lines will keep growing as long as "we execute our plan to reduce the
cost of our product, generate cash flow and look for opportunities"
On the Net: www.calamp.com
California Amplifier
President, CEO: Fred Sturm 2001
Revenue: $125 million
Headquarters: Camarillo, with operations in Texas, Minnesota, France and Brazil
Employees: 350 in Camarillo, 500 total
Products: Amplifiers, antennas, receivers, converters and other equipment for
satellite television systems, wireless cable and wireless broadband access
systems. Company also makes a signal scrambling system to block unauthorized
viewing of cable TV programming.
Source: California Amplifier Inc.
By Roger Harris
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(c) 2002, Ventura County Star, Calif. Distributed by Knight Ridder/Tribune
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