67 WALL STREET, New York - July 10, 2012 - The Wall Street Transcript has just published its Electronic Components Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.
Topics covered: Electronics Manufacturing Supply Chain - Secular Connector Demand Growth - Automotive, Data Center and Mobile Spending - Component Price Erosion
Companies include: AVX Corp. (AVX); Arrow Electronics (ARW); RELM Wireless Corporation (RWC); T-Mobile (DTE.DE); and many more.
In the following brief excerpt from the Electronic Components Report, expert analysts discuss the outlook for the sector and for investors.
David P. Storey has been President and Chief Executive Officer of RELM Wireless Corporation since July 2000. He joined RELM as Executive Vice President and Chief Operating Officer in June 1998. As Executive Vice President of Manufacturing for Arris (formerly Antec) Corporation from January 1994 to June 1998, his responsibilities included six manufacturing facilities with 2 million square feet of floor space supporting manufacturing and distribution services. Prior to joining Arris, Mr. Storey was an Officer of Keptel, Inc., which was acquired by Arris. He has also held senior management positions with EG&G, GTE, Exxon Office Systems, American Hospital Supply and Gould.
TWST: Let's begin with an overview of RELM Wireless, your history, products, services and customers.
Mr. Storey: Well, RELM Wireless Corporation (RWC) has been in business for over 64 years, and it has taken many forms along the way. But the important part of RELM is - the important part of the story - is the transition that took place when I was promoted to CEO back in July of 2000, and I put together a plan to reshape the company and get it focused. RELM had been part of a mini conglomerate, and sometimes when that happens, you can lose focus on how to grow a company.So at that time the company made a commitment to mission-critical interoperable public safety communication; designing and manufacturing digital products in accordance with the APCO Project 25 standard - otherwise known as P25. We also embarked on a plan to develop our own products and technology rather than licensing them from the market leaders. Of course, the big market leader in this space is Motorola.To fund our plan we went out and raised money, first through issuing subordinated convertible debt and then through a public rights offering. We used those funds to develop our lines of P25 solutions in-house, thus owning our own technology and controling our cost along the way, which led to some really nice gross profit margins resulting in a string of profitability from 2003 through 2007. We believe our gross profit margins were and continue to be market leading. We accomplished those results concentrating on only one sliver of the frequency band, which was VHF. We used those profits to initiate a plan to develop the KNG line of products, our next-generation product. This development was again focused on mission-critical communications technology, and it was focused on Motorola's top-of-the-line product at the time. We wanted to make a better product at pretty much half the price.
TWST: Where does the KNG line fit in to the overall public safety ecosystem?
Mr. Storey: Well, the KNG line is, again with this P25 digital mandate, heavily utilized by the federal government and by the state and local governments. There are a couple of initiatives out there. The federal government initiated a program called IWIN. Originally, it had a vision of covering the entire country with a VHF, P25 trunked system. That was being driven by the Department of Justice, but even though it started and there was some investment in certain pockets, it proved to be too heavy a burden for the federal government, especially in these days of reduced budgets. Since then, we've seen many, many states adopt the P25 mandate as well as most major cities. So we have both state and local strategies. We have a great presence with the DOI and Forest Service, and we're trying to penetrate these new agencies with the KNG line, agencies such as the DHS, Justice, Treasury and State department.We've seen with our legacy customers, they want to migrate onto statewide systems, so we are working very hard to make sure our products are compliant on these systems. We're having some success. In fact, the DHS initiated a program called CAP Testing, compliance testing, and to be on their database of compliant products you have to be able to interoperate with at least three other manufacturers' infrastructure. RELM, I'm happy to report, is approved on at least four - and of course, the major one being Motorola since they dominate the market. So our products work on the systems of Motorola and Harris and others, which is pretty exciting.So where does RELM fit in to this? Where the KNG line enters the market, we've seen that our big competitors in the marketplace have evolved to a more expensive platform, upwards to $4,000 and $5,000 a unit. RELM's value proposition delivers the same quality or better at a third of the price, so we're a value competitor with the added benefit that we assemble the product right here in the United States in Florida in our manufacturing facility, which is 55,000 square feet, and we deliver all service from there. We design in the United States. We manufacture in the United States. So at this moment in time, we have a company that owns its own technology, is on the verge of gaining new customers and new markets. We will obviously control our cost, so we're able to deliver better bottom-line performance as we get the top line moving.
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