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Pinnacle Data Systems, Inc. (PNS) |
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CEOCFO Current
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This is a printer friendly page! Serving
some of the largest technology manufacturers in the world, Pinnacle Data Systems
custom-engineers, manufactures and services embedded computer systems that perform
critical control functions in their customers’ products BIO: PDSi empowers OEMs to extract the maximum performance
and value out of UNIX, Linux or Windows-based Intel and SPARC computing platforms by
enabling emerging technologies and tailoring hardware solutions around the demands of
specific industries, OEMs and applications. PDSi offers a full range of sophisticated
intelligent network servers, application-specific systems and customer design services for
the markets it serves. CEOCFOinterviews: Mr.
Bair, please tell us how Pinnacle Data Systems was started and what your vision for the
company is today. Mr. Bair: “I founded the company with two engineers at Ohio State to provide repair and logistic services for high-end Unix workstations and servers. From there, we’ve grown to a company uniquely qualified to provide professional services for the original equipment manufacturer (OEM) marketplace, in, among others, the medical and commercial imaging, manufacturing process-control, aerospace and telecommunications equipment markets. We are providing hardware design, software design, manufacturing prototyping services, repair and logistic services and product management. We are providing these services to global Fortune 500 companies. The common thread for these industries is that all the products we manufacture for them must operate on very reliable hardware and on very reliable and scalable operating systems." CEOCFOinterviews: Will you give us an example of what you might do for one of your customers? Mr. Bair: “One of our customers is Alcatel (NYSE: ALA), one of the largest telecommunications companies in the world. A major project with Alcatel involved their need to increase their network’s capacity for what is called a “home location register.” That requires a system that, when you call from your cell phone, will find your information on a database somewhere in the world. Working with one of our strategic partners, Sun Microsystems, we engaged in a complete re-design of the server that was going to run Alcatel’s application. When we were done, we had provided them a new multiprocessor Compact PCI server solution that was NEBS certified, and from a form, fit and function stand point, dropped in as a direct upgrade to their existing systems, but with many times the performance." CEOCFOinterviews: Does it start with a design concept? Mr. Bair: “Generally, it’s to the greatest advantage of our customers for us to be brought in pretty early in the customer’s design process. We prefer that as well. However, we have successfully completed a number of projects where we’ve actually started in the middle of that process where the OEM already had a fairly specific product they wanted manufactured. In those instances, we perform the detail design work on the component we are going to make and then manufacture it for them. Sometimes we begin with an end-of-life situation, such as the work we’ve done with Hewlett-Packard on its automated storage systems, where we started providing the repair services for existing products in the field and then were asked to take over all of the end-of -life manufacturing.” CEOCFOinterviews: How do you reach your customers? Mr. Bair: “Our industry relationships with Sun, Intel, Agilent, etc., often result in introductions to new customers. We also have a direct sales channel with coverage in the east, west and central regions of the United States." CEOCFOinterviews: Will you tell us more about your relationship with Intel? Mr. Bair: “We were recently awarded membership in the Intel 2003 Premiere Provider program for demonstrating a distinct level of expertise in Intel technology. All of the OEMs we work with in telecommunications, medical imaging and manufacturing process control, consider system security and availability to be critical to their applications. Because of our relationship with Intel and the expertise for which we’ve been recognized, we are able to take Intel hardware platforms and combine them with the Solaris operating system from Sun, which is world-renowned for its security and reliability, and provide them those critical features. There are all kinds of computer viruses going around in today’s environment, so our OEM customers want to use an Intel platform with the Solaris operating system because it is so secure and virus immune.” CEOCFOinterviews: Why are people coming to you as opposed to your competition? Mr. Bair: “We provide the entire solution across the life cycle of a product and we provide very flexible and proactive engineers that are very customer friendly. They work with the customers from the beginning to the end of the project, and we always become an extension of our customers’ engineering teams through the process. In addition to our engineering expertise, it is the partnership and relationship building that we do at PDSi that sets us apart from our competition.” CEOCFOinterviews: How have you been affected by the downturn in technology, and how do you get out of it? Mr. Bair: “If you look at our growth pattern since 1998, we went from sales of $9 million, to $12 million, to $25 million in 2000, and then the economy went into a recession. We only dropped to approximately $22 million in 2001, when many of our competitors’ sales dropped about 50% and 60%. We currently are running at a four-quarter rate of about $17.7 million with about 15% return on net assets. I think we have fared well through the down economy. One of the things that helped us is the repair business; many people are getting computer products repaired rather than buying new ones. The products we are selling go into core products for our customers that they have already made long term and substantial investments in, thus minimizing our risk." CEOCFOinterviews: Will you tell us about your agreement with Lorad Medical (a division of Hologic) (NASD: HOLX)? Mr. Bair: “We were chosen for that program based on our ability to satisfy the demanding regulatory requirements and lifecycle support necessary for medical diagnostic equipment, in this instance, for mammography. We are proud to work with Lorad Medical because they make life-saving products. Those products have a very long development cycle. When you go through FDA certification for a product, you need a very long lifecycle of support and product availability to be able to recover your initial investment. We are providing Lorad Medical with a stable platform on which they can continue to build their technology for years to come.” CEOCFOinterviews: Do you do the manufacturing? Mr. Bair: “After we architect and design the board level product, we actually turn to a number of contract manufacturers who assemble the boards. After they send the boards back to us, we perform the system level manufacturing, complete the software and perform the final integration for delivery of a full turnkey solution.” CEOCFOinterviews: How do you keep up with rapidly changing technology? Mr. Bair: “One of the things we strive to do is design long lifecycle components into the initial solution, and the way you accomplish that is by starting out with building blocks that are going to be supportable for a long period of time. If we are going to build a board for a medical OEM to go into a certified FDA medical solution, when we lay out their boards, we have to select components that have a long road map and multiple equivalent suppliers. We have, for example, been building an FDA certified solution for Bayer Diagnostics for about seven years. What has happened when a component of that product has gone end-of-life? We’ve purchased or built something to replace it that does not change the form, fit and function of our product so it provides the benefits of the new technological advancements, but does not require new FDA certification.” CEOCFOinterviews: Where do you see new growth in the future? Mr. Bair: “We see growth across many of the markets we serve, especially where OEMs have cut resources over the past couple of years, are maintaining an internal set of core engineering competencies and are out-sourcing for their specialty engineering needs.” CEOCFOinterviews: Why should potential investors be interested now? Mr. Bair: “I believe we have validated our business model over the last few years. We can leverage a large customer base and great partner relationships. We have a proven and experienced management team. We have significant growth opportunities and an efficient organization. PDSi right now is a low-priced investment and I want to see a lot of growth in our future.” CEOCFOinterviews: What should people know about the company that they may not realize at first? Mr. Bair: “A lot of OEM customers come to our facility and see all of our engineering, manufacturing and service capabilities, and they cannot believe that a company our size has so much talent in one place. We do a lot of diverse design work around many different technologies which constantly challenges our engineering and technical staff to keep up us on the leading edge. Every design is a unique opportunity for us to be innovative." CEOCFOinterviews: In closing, as CEO, what are your activities on a daily basis? Mr. Bair: “I lead the company, and I do that in a number of ways. I work with our industry contacts and relationships and make sure that the company is moving with the right partners into the future. I also make sure the management team is executing on the strategic plans we have developed to fuel future growth. Overall, I keep my eye on where we should be and where we are moving as a company.” disclaimers |
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