DENVER-Following its $107 million cash acquisition of Marconi Instruments Inc. in February, IFR Systems Inc. began a road tour last week-part product demonstration and part branding initiative designed to introduce the “new” IFR.
What began as an avionics instrumentation company has grown to a global test and measurement company with products designed to meet the testing needs of several industries.
IFR’s most significant achievement to date was the Marconi buy. However, that transaction has had serious effects on the company’s financial statement. IFR released third-quarter results showing a net loss of $1.6 million, or 20 cents per share, whereas earnings for the same period last year showed a net income of $1.8 million, or 22 cents per share.
This quarter is the first time the company has shown a net loss, as well as the first quarter it has been in debt. But according to Fred Hunt, IFR president and chief executive officer, it was necessary.
“We know it was a big bite,” he said of the Marconi acquisition. But “with the climate today, it’s either eat or be eaten.” The question remains whether or not the company bit off more than it can chew.
Hunt said he believes IFR will digest Marconi successfully and outlined a new corporate structure to do so, which has the company divided into two main units-Electronic Test and Measurement and Optical Test and Measurement.
Both IFR and Marconi made cellular test equipment before the merger. Marconi, a European-based firm, was focused on Global System for Mobile communications technology, while IFR focused on Code Division Multiple Access and Time Division Multiple Access technologies, which are more popular in the United States. Combined, IFR’s cellular test equipment interests fall under the ETM division.
Marconi is a well-known brand in Europe, but General Electric Co. plc kept the Marconi name after selling it, so in part the road show’s goal was to brand its newly announced products. Four of 10 new products IFR announced this month are wireless and cellular test products.
The company’s competitive strategy is to compete in niche markets where the larger test equipment players are not as strong or don’t care to address. Hewlett-Packard Co., for instance, will remain the top dog in the test-equipment field, so IFR said it is striving to be in the top three somewhere, likely third.
Its plan to do this is to remain small enough to remain flexible while big enough to command a presence.
“We do the rope-a-dope well,” said Hunt, referring to Muhammad Ali’s strategy that defeated the bigger and stronger George Foreman in “The Rumble in the Jungle” world championship fight. “We know how to box and weave.”
IFR also is looking to expand its product portfolio to testing more than just transmission quality; “beyond testing the pipe to testing what goes down the pipe,” in Hunt’s words.
At PCS ’98, IFR introduced the 6800 microwave system analyzer, the 2025 series of signal generators, the PhoneTest and 2935 test head for GSM 900, 1800 and 1900 MHz handsets, and the 2398 spectrum analyzer for wireless infrastructure.
