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Brightpoint expects growth to come from
geographic expansion, new products and services as well as the organic growth of the
industry, specifically in underserved and developing markets including Eastern Europe,
India, Russia and markets in Latin America
2601 Metropolis Parkway Suite 210
Plainfield, IN 46168
President, Brightpoint Inc., and Brightpoint Americas
Interview conducted by:
Lynn Fosse, Senior Editor
November 9, 2006
President, Brightpoint, Inc. and Brightpoint Americas
J. Mark Howell has been President of the Company since September 1996 and Chief Operating
Officer of the Company from August 1995 to April 16, 1998 and from July 16, 1998 to March
2003. Mr. Howell currently serves as President of Brightpoint Americas. He was Executive
Vice President, Finance, Chief Financial Officer, Treasurer and Secretary of the Company
from July 1994 until September 1996. From July 1992 until joining the Company, Mr. Howell
was Corporate Controller of ADESA Corporation, a company which owns and operates
automobile auctions in the United States and Canada. Prior thereto, Mr. Howell was an
accountant with Ernst & Young LLP
Brightpoint, Inc (NASDAQ:CELL) is a global leader in the distribution of wireless devices
and in providing customized logistic services to the wireless industry. In 2005,
Brightpoint handled 42 million wireless devices globally. Brightpoint's innovative
services include distribution, channel development, fulfillment, product customization,
eBusiness solutions, and other outsourced services that integrate seamlessly with its
customers. Brightpoints effective and efficient platform allows its customers to
benefit from quickly deployed, flexible, and cost effective solutions.
CEOCFO: Mr. Howell, what was your vision when you became
president and where are you today?
Mr. Howell: When I first joined the company, Robert J.
Laikin, who is the companys founder, chairman and CEO, and I really believed that as
the wireless industry continued to evolve, the services that would be demanded from
distributors and logistics service providers on behalf of both the equipment manufacturers
and network operators would continue to increase. Therefore, his business strategy has
always been to develop expertise and service capabilities in advance of the wireless
industry, needing those 4 services so that our customers and suppliers are always prepared
and ready to respond to the evolution of the industry. One of the reasons why Brightpoint
has been so successful over a long period of time is because our customers and suppliers
have come to rely on us to be able to provide them the distribution capabilities, access
to new channels and customers, customization and fulfillment services, and turnkey
solutions when they have been in need of those services.
CEOCFO: What exactly
does Brightpoint do?
Mr. Howell: Brightpoint is a third party service
provider to wireless equipment manufacturers, MVNOs (Mobile Virtual Network Operators) and
wireless network operators. We provide distribution services for wireless device equipment
manufacturers such as Nokia, Motorola, Samsung, Kyocera, LG, Sony Ericsson, HTC and
others. For wireless network operators, MVNOs and some manufacturers, we provide
outsourced third party services by providing them a full-range of customized logistic
services, which are mission critical for them, and we can do it in a variable cost
environment. Because it is our primary focus area, we can provide them world-class
logistic services and help them take cost out of their supply chain.
CEOCFO: How is the
business doing and where is the growth coming from?
Mr. Howell: Our business is doing well and part of that
is because we have great relationships with industry leaders like Nokia, Motorola,
Samsung, Sony Ericsson, Kyocera, LG, HTC and others. We are fortunate to benefit from
their success and as they gain increased market share, Brightpoint grows with them. On the
network operator side, we have been successful because of important relationships with
companies like Comcel in Colombia, Sprint Nextel, Virgin Mobile, TracFone Wireless,
Boost Mobile, Alltel, and others in the United States, Vodafone in Australia and T-mobile
in Slovakia among others. Where we really see the growth coming from is the next
generation of services. We believe that devices are going to get more sophisticated and as
they get more sophisticated, the service requirements around those will increase. In
addition, market segmentation and channel differentiation is making the services that
Brightpoint provides more valuable to our customers and suppliers. A third area is the
enterprise space where we are focusing more on business users with data centric devices
via VARs (Value Added Resellers) and systems integrators.
CEOCFO: Will you tell us
about Trio Teknologies; what does that add?
Mr. Howell: About a year and a half ago, Brightpoint,
in response to a trend that we saw in the industry towards enterprise and towards data
centric devices, established a new service line called Advanced Wireless Services.
Advanced Wireless Service was built around three components; one was taking the next
generation products and activations out to the VAR, and system integrator community to
allow them to sell data centric devices to their enterprise customers. The second element
was around Voice over IP or VoIP technologies where we established relationships with
Skype, Vonage and Packet8. The third piece was around content and application.
Specifically, in regard to the converged smart data centric devices, as we began to
develop our VAR (Value Added Reseller) and system integrator customer base, we identified
Trio Industries, Inc., doing business as Trio Teknologies (TrioTek), as being
the leader in this space. By acquiring TrioTek we believe, we will be able to quickly
accelerate our growth and expand the number of relationships and significantly improve our
CEOCFO: What is the
Mr. Howell: In each of our lines of business, we face a different set of
competitors. In our product sales and distribution business, we face the incumbent mobile
phone distributor, CellStar, and Brightstar in the US and Latin America, and Dangaard in Europe.
The competitor space in Asia-pacific is quite fragmented. What we have seen over the years
is a tremendous amount of attrition. Where at one point there were hundreds of people who
were in the mobile phone distribution business, we have whittled that down now to a few
global players. It is a much more sophisticated industry today. On the logistic and
subscriber services side, Brightpoint competes with major 3PL (third-party logistics)
providers such as Caterpillar Logistics Services, and UPS Worldwide Logistics. The
Brightpoint customer relationships in the wireless logistics space are primarily developed
because of our capabilities and expertise in providing customized logistic services to the
wireless industry. Customized logistics in wireless requires a unique set of services and
capabilities, which are not always the expertise of a broader based 3PL providers.
CEOCFO: Do you see
expansion into different geographic areas or where do you see the growth coming from in
Mr. Howell: We do see our growth coming from geographic
expansion. We also see our growth coming from the addition of new products and services as
well as the organic growth of the wireless industry. Specifically with geographic growth,
we think there are a lot of underserved markets and developing markets including Eastern
Europe, India and Russia and markets in Latin America that have huge demand for the types
of services that Brightpoint offers. Now that network operators and the equipment
operators are establishing themselves globally and are beginning to manage themselves
beyond just a regional basis and want to take costs out of their supply chain, we are
being invited by incumbent customers and incumbent suppliers to go with them in some of
CEOCFO: Do you see
acquisitions and joint ventures in the future?
Mr. Howell: Yes I do and we have a history of that. Our
strong balance sheet allows us to look for both Greenfield and acquisition growth
projects. TrioTek is a great example of how we were able to jumpstart our advanced
wireless services initiative through a strategic acquisition. We will continue to seek out
joint venture partners, potential acquisition candidates to help us meet our strategic
CEOCFO: What is the
financial picture like for Brightpoint today?
Mr. Howell: We have a strong balance sheet and it has
become a differentiator for us. We continue to increase our market share. We are very
focused on margin expansion and the economies of scale in our business allows us to be
highly operationally efficient. In 2005, we handled 42 million wireless devices and hope
to grow faster than the wireless device industry in unit growth rate this year.
CEOCFO: Does Wall Street
recognize where you are and where you are going?
Mr. Howell: I will leave that for our analysts to
discuss, but I think there is good recognition of Brightpoints market position. I
think there is good recognition of our discipline in terms of how we manage our assets and
our focus on return on invested capital and cash generation. I think Wall Street has an
appreciation for Brightpoints strong reputation within the wireless industry. I
think our focus on key financial metrics gives them the confidence that we will continue
to be successful.
CEOCFO: Does the state
of technology matter much for you as long as you keep up with what is new?
Mr. Howell: We have to have a clear understanding of
where the wireless technology is going. As we migrate from voice centric devices into
multi-media or data centric devices, we need to understand the new channels that would
demand those types of products or the new points of sale that would need to be created so
the consumers would have access to those products. One of the things that we do that is
important to our suppliers is to educate our channels on the functionality of these
devices. By developing and supporting a highly sophisticated dealer/retailer base, we are
able to provide a high quality user experience. It is these enhanced services and a high
value subscriber that are going to enhance the profitability of our network operator
partners. We want to make sure that more and more data centric products get into the hands
of the consumers, and they are able to take advantage of the functionality offered by
these products. In addition, we make sure that we have the appropriate channels
established to get the products to market, and that the channels have an appreciation for
how these products work and how to sell the unique services associated with these products
and therefore give our suppliers and carrier customers an advantage.
CEOCFO: Why should
potential investors be interested and what do people often miss about Brightpoint that
they should focus on?
Mr. Howell: Brightpoint is incredibly well situated
within the wireless industry and one of the key reasons investors make an investment in
Brightpoint is because they have confidence in the growth of the wireless device industry.
We are a pure wireless play and are agnostic as it relates to any of the technologies and
we are well diversified in terms of our customer and supplier base within the wireless
space. An investment in Brightpoint is an investment in the wireless device industry.
Economies of scale in our business drives operational efficiencies and helps in margin
expansion. In 2005, we handled 42 million wireless devices globally and are on track to
grow faster than the wireless device industry in unit growth this year. It is such an
exciting place to be in today, as we continue to see the capabilities of these wireless
devices expanding. Converged smart devices are fast becoming an extension of your desktop
and are able to run smart applications for an enterprise user. Compelling form factors,
embedded MP3 players and higher mega-pixel cameras continue to drive the replacement
cycle, which is the single largest factor fueling the wireless devices demand on a global
CEOCFO: Finally, is
making your presence known to potential investors a focus?
Mr. Howell: I think we do a good job of trying to
communicate the Brightpoint story, and value proposition. We have a great group of people
who have made it their mission.
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