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Technology Stocks : Praegitzer Industries (PGTZ) -- Ignore unavailable to you. Want to Upgrade?

To: Creditman who wrote (138)	1/21/1998 11:11:00 PM
From: Rumblinrob	Read Replies (1) \| Respond to of 196

My understanding of "one stop shopping" is that a company can get a board designed, elect to pay for a run of prototype boards and have a large order fabricated. Because PGTZ designed the board, it is quicker to send the board design data to a PGTZ facility that will turn a prototype board order and, possibly, a fabrication board order. Costs associated are lower which saves the customer time and money.

To: Creditman who wrote (138)	1/22/1998 7:04:00 AM
From: Asymmetric	Respond to of 196

Article From The Business Journal (Portland, Ore) >>Creditman - thought this might be of interest. Peter. Monday -- January 19, 1998 Praegitzer praised for its design bureau's work Dan McMillan Praegitzer Industries Inc. is touting its printed circuit board design capabilities and pointing to an industry newsletter report that says it leads the industry in design work revenue. That's nice, say sources who follow the Dallas, Ore.-based company, but it's difficult to say with much certainty how much volume production business is generated by having a design bureau. Still, the report and its implications are better than a whack on the head with a heavy circuit board. According to the research firm EDA Today, Praegitzer Design, a division of Praegitzer Industries, is the largest printed circuit board design service bureau in the U.S., with a 9.2 percent share of the estimated $99.2 million market. Praegitzer's 1997 design revenue of $9.1 million is almost triple that of its closest competitor. The report, which was sponsored by Praegitzer, says the design services market is expected to grow at a 17 percent compound annual rate for the next five years, while current overall growth for the circuit board industry is about 10 percent. Those findings are not big news, said one source, but neither are they insignificant. It makes sense to offer design services, the source continued, especially considering that the hardware and software required to design printed circuit boards will run around $300,000. The salary for an engineer to run the equipment will cost at least another $85,000. It's more difficult, however, to determine with much accuracy how much of the design work will turn into prototyping work and then into volume production work. There's a fall off at each step in the process and no clear multiplier to gauge accurately how each dollar spent in design work translates to dollars spent on volume production, the source said. That's the goal. Praegitzer's strategy is to snag a client's design work and then capture the volume production job. It's a sound strategy, the source continued, but it's hard to say how successfully it works. Companies that contract for printed circuit board production are loathe to switch vendors without reason, and it's unclear if design capabilities is enough of a reason. Matt Bergeron, Praegitzer's chief operating officer, said the company is seeing benefits from its design bureau, but he did not offer hard statistics. Another source said he's been told that somewhere in the neighborhood of 50 percent of design work turns into volume production for circuit board makers with design shops. Asked why his company sponsored the study, Bergeron said Praegitzer simply was curious about the size of the design market. "We had a strong suspicion we were the largest," he said. John McManus, a senior vice president at Needham & Co., a New York-based company that also helped underwrite Praegitzer's initial public offering, said the size of the design market is not especially noteworthy. What is noteworthy is the potential for design work to become production work. "Praegitzer's No. 1 position in the design market and its one-stop-shopping strategy indicate that the firm is better positioned than any of its competitors to pull design customers into their quick-turnaround volume manufacturing facilities and therefore grow their overall business," McManus said. But neither McManus nor the EDA Today report give any hard numbers.