Craig,
Good for you to finally be researching the company.
The questions about sales per employee is a good one. I believe that Sankar Acharya was also asking this question before he left for greener pastures. One suggestion was that the company has absorbed many inexpensive, low margin product lines, and will also handle special-orders which aren't very profitable. One example was that they have made some ancient, slow-speed modems because a customer's computer could only support that model. This type of customer service is a two-edged sword: the goodwill may lead to future orders of high-margin products from those same customers, but can the company afford to show this goodwill when other companies don't?
I have seen references to some layoffs of employees from absorbed companies, and they may be considering selling some of these less-profitable units, or shutting down some product lines for these low-margin operations. Sales of higher margin products such as the GigaMux should also significantly improve the sales/employee numbers.
While you are researching the company, don't forget to look at the latest 14-A (proxy report), and report back to us on Par's "multimillion dollar salary." I'd like to hear how his salary compares with those of the other companies you mentioned: CSCO, ASND, COMS, etc., etc. |
