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CEOCFO Monthly Analyst |
Moving towards being a more inclusive wireless network solutions provider as opposed to just a components provider
Communications
Equipment ARC
Wireless Solutions, Incorporated 4860
Robb Street, Suite 101
Glenn
Befort
Interview
conducted by: CEOCFOinteriviews.com January
2001 BIO
OF CEO
Glenn
A. Befort became Chief Executive Officer, Treasurer and a Company Director
on July 3, 2000. Mr. Befort
had been with Siemens since 1989, most recently as President and Chief
Executive Officer of its Information And Communications Mobile, LLC,
Company and just prior to that, President and Chief Executive Officer of
its Information And Communications Products, LLC, Company.
These companies conducted the Siemens’ business in the USA region
for wireless and cordless telephones, wireless infrastructure, computer
systems, retail point of sale systems, banking systems, communication
cables and associated service. Prior
to becoming President and CEO of ICP, he held several Sr. Vice President
positions with Siemens Business Communication Systems.
He has served on the boards of ICP, ICM, the Siemens’ Foundation,
Siecor and Wincor Nixdorf and is currently on the Board of Harvard
Technologies (dba Harvard Manufacturing Texas).
Previous to working for Siemens, he was employed by IBM. ABOUT
ARC Wireless Solutions
OFFERINGS
Cellular Disguised
Decal Antennas – offers easy
installation, multi-polarization, which reduces interference and dropped
calls, with wider bandwidth, which extends signal, a unique security
design that reduces risk of theft and leading edge technology. TV
(analog/digital) - Freedom/Dish
Antenna – Incorporates a
proprietary cable assembly that functions as a supplemental antenna
allowing for omni directional reception of TV signals. LTVA
Antennas – a VHF/UHF antenna
system that has a revolutionary electromagnetic antenna design.
Unlike conventional dipole antennas, the LTVAs can receive both
horizontal and vertical planes and include built-in switchable amplifiers. The
Walldo Antenna – a mid-gain VHF/UHF conformal antenna system Industrial
Scientific and Medical Networks-
Complete design and provision of end-to-end network solutions for LANs and
WANs.Antennas- –multiple 2.45 GHz antennas designed to
provide dependable performance for wireless LANs and data applications. Multiple
two-way 2.1 – 2.7 GHz Antennas
– for faster Internet and data connections; integrated antenna/transceiver
with business partner TSI-USA Bluetooth ™
A
PCMCIA Reference Design with business partner Signia Technologies to
promote availability of low cost Bluetooth ™ applications.
Window
To The World Satellite
Dish Installation Kits CEOCFOinterviews
– Mr. Befort, please tell us
about ARC Wireless. Mr.
Befort – “ARC Wireless
Solutions, Incorporated is a relatively new name in the industry.
In October of 2000, Antennas America, Incorporated changed it’s
name to ARC Wireless Solutions in order to better reflect its evolving
business strategy.” “Although
recognized that, in and by itself, provision of just antennas provided the
opportunity of participating in a growth market given the thrust of
wireless technologies in general, the company felt that there was a much
bigger opportunity if they moved towards being a more inclusive wireless
network solutions provider as opposed to just a components provider.
As such, the Company mounted a strategy to become an end-to-end
wireless network solutions provider supported by internal, acquisition and
partnership growth initiatives; this recognized that a small company of
it’s nature could not organically grow into this broader market space on
a timely basis.” “The
company crafted its acquisition strategy early in 2000, completing its
first acquisition towards the end of May, acquiring what today is called
Winncom Technologies Corp., a wholly owned subsidiary of ARC Wireless
Solutions. Winncom is
primarily focused on providing local area and wide area wireless network
solutions using unlicensed frequency spectrum technology commonly known as
ISM (Industrial, Scientific and Medical).
The acquisition of Winncom took ARC Wireless, which was at that
time still known as Antennas America, from a wireless network components
provider to that plus an end-to-end wireless network solutions provider
employing one of the major standards used for wireless local as well as
wide area network solutions.” “In
September we closed another acquisition, a company that is known today as
Starworks Wireless, Incorporated, a wholly owned subsidiary of ARC
Wireless Solutions. That
company primarily participates in the satellite market space; solutions
they offer include subscriber-side satellite dish self-installation kits
and professional installation kits, primarily to date used for one-way T.V.
broadcasting. However, the technology basis is there to support the
evolving two-way satellite support of high-speed Internet access and
two-way data transmission.” “Since
the name change from Antennas America to ARC Wireless Solutions, the
antenna activity has been relegated to an operating division of ARC
Wireless Solutions called the Antennas America Division.
The two other companies, Winncom Technologies and Starworks
Wireless are wholly owned subsidiaries.
The fundamental point is that, because of the Companies change in
strategy and direction, the Company is becoming much more wireless network
solution oriented as opposed to being just a network component provider.
That does not mean that we will take focus off of the component
element, because that is a viable business onto itself, but it does mean
that we have the opportunity of addressing a much broader part of the
market.” CEOCFOinterviews
– Do you manufacture your
product? Mr.
Befort – “We have
manufacturing, development, network design, distribution,
service/installation and, of course, sales and marketing capabilities. We
do manufacture some of our offerings, but even if we don’t, we will take
“single point of ownership” and go to a customer, help them design
their network, then take full responsibility up through the installation
and service. As necessary, we will engage third parties to affect that end
result. For the markets where
we participate, we can provide “womb to tomb” support as it relates to
the provision of wireless component and/or total network solutions.” CEOCFOinterviews
– What is the size of your
company? Mr.
Befort – “We have roughly a
hundred people and business relationships with other parties; by that I
mean other companies that provide value-add under our guidance. As an
example, we might choose to outsource provision of selective network
components, installation or service.” “From
the standpoint of current revenues, the average monthly revenue for
3Q’00, which has been SEC filed, is on the order of $2.3 million, per
month.” CEOCFOinterviews
– Could you further explain
your growth strategy? Mr.
Befort – “There are three
elements of the growth strategy; growth through internal, acquisition and
partnership initiatives.” “We
currently have several partnerships; a significant one, as an example, is
with TSI-USA. We recently
announced that we were providing to the market place an integrated
subscriber antenna/transceiver solution that will be used for two-way
Multi-channel Multipoint Distribution Services. MMDS is basically a network solution using wireless
technology whereby a service provider can provide high speed internet
access to a rather widely dispersed set of customers very cost
effectively. This is one example as to how we promote growth; through
relationships with third parties whereby we leverage their expertise and
our expertise toward a common objective.”
“I
previously mentioned our acquisitions, and they are certainly a
significant part or our growth strategy.” “On
the internal growth side, as an example, we have made investments in our
antenna business through the addition of engineering talent, so that we
can address a broader segment of that market. We are also investing in
expansion of our ISM business.” “So,
basically we are investing in our current businesses but also have our eye
on other businesses, that if, through acquisition or partnership, can
bring additional add value to the market place while also being
synergistic with the overall ARC Wireless Solutions strategy.”
CEOCFOinterviews
– What is your marketing
strategy? Mr.
Befort – “First of all, we
have the ability, through current customer sets, to grow our business as
they grow their businesses. We are also fortunate in that the technologies
we are focused on are undergoing significant growth in both the domestic
as well as the international market place.
To some extent, it’s just a matter of making more sales and
marketing investments; getting more visibility to the Company and the
wireless network solutions we can provide.” “We
want to leverage, through “word of mouth”, our reputation in terms of
quality of product, responsiveness and quality of service.
To some degree, that is probably the most effective marketing
strategy one can have; by this I mean, if one has a good reputation with
the customers served and can use them as reference accounts, one can
readily get a “leg up” on the competition.”
“We
also have additional network solutions coming into play; as mentioned we
have a significant “play” in the ISM market, and we really hope to
have a significant “play” in the MMDS market. In this market, we can
leverage our own as well as our business partner, TSI-USA’s, marketing
talents. We also participate
in some of the cellular markets, the satellite subscriber-side market, as
well as the global positioning systems markets, as examples. So we have rather broad market coverage and one of the things
that we’ve been able to leverage is that antennas are critical to any
wireless communications. We have the ability to be a “broad based”
solutions provider.’ “Given
the “ten plus” year track record of being in the antennas business, it
gives one quite a bit of familiarity with the markets that are out there,
as well as the key players in those markets, that need components and/or
network solutions from a Company like ours.”
CEOCFOinterviews
– Which product or division do
you see being your best revenue producer of the future? Mr.
Befort – “Our Winncom
Technologies subsidiary. Any offering that is end-to-end network solutions
oriented, I personally think, will be the ultimate driving influence of
financial results for the company. If
you think of the market place as it’s characterized today, customers are
obviously interested in the ability to get on-line quickly, should they
have a demand for fast Internet access, as an example.
They want quality of service, meaning that the service is reliable.
They want low cost and they want the feature/function that equates
to their demands.” “An
Internet Service Provider, as an example, is more than interested in how
they can most effectively meet customer needs.
Having been in many businesses through out my career, the more I
could look at one party to take “single point of ownership” for
providing a business solution, the more effective it was for me. So, if we
can provide an end-to-end network solution and the customer, in this case,
the ISP, only has to deal with us to realize a complete network solution,
even though we may have to deal with multiple third parties, it is
to the ISP’s advantage. I
believe that the market will more so demand “single point of
ownership” type solutions and that is the path we intend to pursue. We
have, in fact, already started going down that path with Winncom’s ISM
based solutions.” CEOCFOinterviews
– How big are the markets for
your products and solutions. Mr.
Befort – “The markets have
huge potential. There are
many opinions as to how fast they will evolve.
For example, if one looks at MMDS, which is an up and coming
technology for two-way broad band access, companies like Sprint and MCI
have invested significantly for licenses to deploy the technology.
On a worldwide basis, the MMDS technology is forecasted to go from
less than two hundred thousand subscribers this year to as many as six
plus million by the year 2005. That rate of growth could be possible for
almost every one of the wireless technologies that we are focused on.”
“Another
example would be ISM, employed for both local area networks and wide area
networks. For local area
networks alone, this market is forecasted to go from on the order of two
million this year, to as many as fourteen million globally in terms of
subscribers, by the year 2005; that’s just one measure of the market
growth. Another measure is
revenue; that will be very dependent on price declines, which will be very
dependent upon the scope of competition as well as any innovation that
underpins the technical solutions.” “One
of the things that we’re proud of is that we currently have seven
patents for solutions that we provide to the market today and we have five
that are pending.” CEOCFOinterviews
– How will you maintain a
competitive edge? Mr.
Befort – “Competition is
very broad based and it’s very specific to the particular market
segments that we participate in. My
personal belief is that, first and foremost, innovation provides the
ultimate differentiator and therefore we have to make sure that we are
properly funding R&D activities to the extent that we believe that
investment will yield results. We must also continue innovation to improve
the effectiveness of all business processes. Beyond that, it really comes
down to how effectively we serve the customer needs in terms of time to
market, quality and cost. We
have very low manufacturing cost for components we manufacture internally
and this provides a significant advantage. That doesn’t mean that we can
rest on our laurels, however, because there is much competition in the
market and new competition is appearing almost daily.
New competition usually comes into play through some innovative
approach on their own behalf. That
has to be contended with, not weekly or monthly but daily.” CEOCFOinterviews
– Do you have the cash and/or
credit to continue your growth? Mr.
Befort – “Since acquisitions
are an element of our growth strategy, further capitalization will be
required.” CEOCFOinterviews
– What is your view and
strategy for crisis management? Mr.
Befort – “First of all, one
has to be proactive and “look around the corners” to see what
potentially could happen. Secondly,
any company that is forward looking is going to have some fall back plans
that they can revert to if the path or strategy that they are currently
trying to execute comes across roadblocks.”
“For
example, if one has an acquisition-oriented strategy, implementation comes
about either through cash and/or “stock currency” investments.
Should the stock market be weak, obviously much dilution can result
to the extent that one uses stock to buy a company, on the other hand a
“soft” capital market could also lead to excessive cost of capital;
these are things that have to be dealt with and right now as we all know,
the markets are very weak. Fortunately, a fall back could be putting more
emphasis on existing businesses and, by so doing, accelerate their growth.
It really comes down to making sure that there are alternatives
that can be engaged very quickly.”
CEOCFOinterviews
– How would you summarize your
story? Mr.
Befort – “In summary, the
Company is going through a fundamental change in terms of its market
focus, moving from a wireless network components provider to that as well
as an end-to-end wireless network solutions provider.
We know that’s not going to happen over night and we believe that
the component business, in and by itself, still has significant value and
therefore we are investing in both, but we are going through a
transformation and we just have to nurture our way through it.”
CEOCFOinterviews
– Is there a final thought
that you would like to leave with a potential investor or shareholder? Mr.
Befort – “We have been
publicly listed since the end of the 1980’s.
In terms of stock market cap, we believe that we represent more
value than what is reflected in the stock price and hopefully others, if
they look at what we have been and are doing, and what our revenue growth
has been quarter over quarter for the last four quarters, will see it the
same way.’ “We
have a web site, which is prolific in terms of all of our financial
reports as well as other information on the company. Access to the web
site is the most effective way of keeping up to date on our Company’s
progress. It also highlights
our portfolio companies, their role in supporting the ARC Wireless
Solutions vision and details various solutions they provide.” |
