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July Cablenomics

Enhancing economic productivity in the cabling business -- is it a conflict in terms to use wireless access to leverage the productivity of cable installers?

Greenspan, speaking before the New York Association for Business Economics in early June, talked about productivity gains in the United States, saying they appear to be structural gains driven primarily by strong advancement in information technology. "What differentiates this period from other periods in our history is the extraordinary role played by information and communication technologies," he said. "The effect of these technologies could rival and arguably even surpass the impact the telegraph had prior to, and just after, the Civil War."

This certainly speaks well for the present and future business prospects of the structured cabling system installer. However, there are risks associated with this advancement in information technology. One obvious risk is the change in the nature of technology directly related to infrastructure implementation, such as the evolving use of wireless LAN technologies that might eliminate some of the need for cabling infrastructure. Another risk to the business owner is failing to take advantage of wireless and other technologies to improve the productivity of their business. If you do not take advantage of this increased productivity, rest assured that one of your competitors will, giving them possibly significant competitive advantages of cost, control and response.

We had been discussing methods of financing growth in past columns, but now we seem to have switched to ways of spending money that could be used to expand working capital. However, investing to increase productivity returns financial savings and thus frees funds for additional working capital over time. To better understand this, we will look into those possibly significant cost, control and response advantages gained by using information technology to enhance productivity. A general view (I hesitate to say consensus) is that wireless technologies benefits will be approximately 50% productivity improvement, 40% cost reduction and the rest in increased revenue and organization efficiency and responsiveness.

These benefits will be driven by the functions achieved and uses gained from wireless technologies. Some of which are:

Email for exact and timely communications

Individual and group schedules and calendar functions

Maps for locating jobsites,

Schematic diagrams, sub charts

Wiring plans

Cables, assemblies and parts list

Automatic tracking of inventory

Just in time order/receipt of on-site material

Input reporting tool for job costing and work completion

Instantaneous productivity feedback and reports

Access to other data stored in the office such as change order
  management and pricing

Elimination of non-productive work time waiting on instructions, parts or
   people

This is only a high level view I obtain after a very interesting discussion with Edwin Wong, Manager of Business Development at AngleBeat.com, a wireless Internet consulting group owned by Gerber & Company, LLC.

Momentum is continuing among larger infrastructure companies and investment groups to aggregate this market place to create companies with national and international coverage, critical mass in related capabilities and economies of scale. Arguss Communications closed three acquisitions in May that increased its capabilities for large-scale fiber optics design and construction. Black Box is perhaps the most visible of the structured cabling rollups as they march forward with acquisitions in Kansas City and Dallas. Their press releases follow our Cablenomics stock chart. Private and venture capital funded rollups prefer less visibility as they grow their infrastructure. Rest assured, this market is very hot and smart owners of high margin installation companies in metropolitan locations can negotiate premiums.

Interestingly enough, several companies and investment firms are taking advantage of todayís high growth market and are increasing their acquisition efforts, especially with contractors/installers/integrators. Many of Gerber & Company, LLCís clients are these firms, who are looking to become part of a larger entity to help them grow, withstand current profit pressures and cash flow issues or address national accounts, while simultaneously providing long-term upside with significantly less risk.

If you are considering selling your firm and are interested in having an initial, exploratory meeting with Gerber & Company, LLC, then you should contact us at your earliest convenience. Ron Gerber, President of Gerber & Company, LLC can be reached at (516) 455-4770 (phone) or via email at rgerber@gerbercompany.com.

Please remember however that Cabling Business Magazine and Gerber & Company, LLC cannot be held responsible for any printing errors. Readers should use this article for informative purposes alone. Any investment decisions should be made with the advice of a financial professional.

 

 

Stock Price Table

10-March-00

12-April-00

16-May-00

15-June-15

Cable/Wire Manufacturers

Spectran*

SPTR

N/A

N/A

N/A

N/A

CDT

CDT

33.50

27.31

31.00

31.88

Corning

GLW

191.50

159.31

179.25

249.00

Tyco

TYC

47.00

47.50

50.75

48.88

Belden

BWC

23.50

26.88

29.44

26.94

Superior Telecom

SUT

12.94

12.94

11.50

11.13

General Cable

BGC

9.25

7.19

8.00

7.75

Encore

WIRE

6.75

6.69

6.63

5.91

Optical Cable

OCCF

54.00

30.25

24.88

30.50

Commscope

CTV

42.75

42.19

43.94

34.94

Hardware Manufacturers

3Com

COMS

68.94

47.00

43.19

49.69

Newbridge

NN

35.19

32.94

41.44

35.50

Molex

MOLX

62.67

52.25

49.63

50.81

Cabletron

CS

47.94

25.38

25.50

22.38

Hubbell

HUB/B

22.38

26.63

25.69

26.44

Microtest

MTST

16.00

8.31

8.75

8.81

Comm. Systems

CSII

22.75

15.81

15.38

16.13

Cisco

CSCO

136.38

66.63

60.00

66.50

Lucent

LU

67.63

55.94

58.50

59.69

Thomas & Betts

TNB

21.50

28.13

29.06

27.75

Advanced Electronic

AESP

5.50

2.31

2.13

2.50

Distributors

Kent

KNT

33.06

28.44

31.00

29.00

Anicom

ANIC

7.63

5.38

5.06

4.22

Alltel

AT

68.06

65.31

63.25

66.31

Anixter

AXE

19.69

28.13

31.19

31.00

Systemax

SYX

9.06

8.69

7.00

4.38

Ingram

IM

14.56

19.56

16.88

Merisel

MSEL

1.56

1.22

1.06

Techdata

TECD

31.75

40.19

40.50

Integrators/VARís

MasTec

MTZ

67.31

76.00

81.06

61.25

Norstan

NRRD

7.25

6.38

5.69

4.81

Datatec

DATC

13.88

7.88

7.38

5.63

Pomeroy

PMRY

17.88

15.94

17.63

14.63

Argus Holdings

ARGX

17.13

20.06

19.81

16.22

Black Box

72.56

72.25

79.00

84.06

Stock Market Averages

DJIA

9,928.82

11378.21

10807.78

10714.82

S&P 500

1,395.07

1496.44

1452.36

1478.64

Nasdaq Composite

5,048.62

3904.01

3607.65

3845.74

* On July 15, 1999 Spectran entered into an Agreement to Merger with Lucent Technologies, Inc.

Arguss Communications

ROCKVILLE, Md.--(BUSINESS WIRE)--May 31, 2000--Today, Arguss Communications, Inc. (formerly Arguss Holdings, Inc.) announced the closing of three acquisitions. The three acquisitions generated approximately $25 million in revenue in calendar year 1999. Precision Valley Communications, headquartered in Springfield, Vermont, provides telecommunications design and engineering services. Fiber Flow, headquartered in Seattle, Washington, provides special fiber optic cable blowing services. U.S. Communications, Inc., headquartered in Albuquerque, New Mexico, provides underground, aerial and maintenance construction services and splicing for fiber optic and copper cable. All acquisitions were made for a combination of cash and securities. Rainer Bosselmann, Chairman and Chief Executive of Arguss Communications, remarked that ``the extensive integration of our existing divisions makes additional acquisitions easier to execute, giving us a good balance between internal and acquisition growth. Arguss is committed to making acquisitions that give our operations greater diversity in its customer base and in its technical capabilities and we are excited about adding the strong reputations of these companies to our own.''

Certain statements contained herein are ``forward-looking'' statements (as such term is defined in the Private Securities Litigation Reform Act of 1995). Because such statements include risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements include, but are not limited to, those discussed in filings made by the Company with the Securities and Exchange Commission.

Arguss Communications, Inc. (NASDAQ:ARGX - news) is a holding company that conducts its operations through its wholly owned subsidiaries - Arguss Communications Group, Inc. (Communications Group) and Conceptronic, Inc. (Conceptronic). Communications Group designs, constructs, reconstructs, maintains and repairs telecommunications systems and provides aerial, underground and premise construction services and splicing of both fiber optic and coaxial cable to major telecommunications customers. Conceptronic manufactures and sells highly advanced, computer-controlled capital equipment used in the SMT circuit assembly industry.

 

Black Box

PITTSBURGH--(BUSINESS WIRE)--June 2, 2000--Black Box Corporation (Nasdaq:BBOX - news) today announced a merger with ST Communications and Cabling, Inc.

Established in 1991 in Kansas City, Missouri, privately held ST Communications provides technical design, installation and maintenance services for premise cabling and related products to customers in greater Kansas City and Des Moines, Iowa. Annual revenues of ST Communications are approximately $5 million.

Commenting on the merger, Fred C. Young, Chief Executive Officer of Black Box Corporation, stated, ``As we continue our worldwide roll-out of high quality infrastructure services, ST Communications will further expand our geographic coverage. ST Communications is an excellent company serving two new geographic areas. We welcome ST to the Black Box family.''

Curtis L. Gordy, President of ST Communications, said, ``These are exciting times for ST Communications and our customers. With the combination of Black Box and ST Communications, we look forward to expanding our high quality services and customer commitment in the Midwest and also worldwide. We are very pleased to be a part of the Black Box Network Services Team, which is unparalleled in the communications infrastructure industry.'' Mr. Gordy will continue to serve as President of ST Communications.

This transaction is being accounted for as a purchase. The purchase price has not been disclosed.

Black Box is a leading worldwide technical service provider of network services and related products to businesses of all sizes, servicing 132 countries throughout the world.

PITTSBURGH--(BUSINESS WIRE)--June 14, 2000--Black Box Corporation (Nasdaq:BBOX - news) today announced a merger with GMCI NetComm, Inc. Established in 1982 in Dallas, Texas, privately held GMCI NetComm provides technical design, installation and maintenance services for premise cabling and related products to customers primarily in the greater Dallas area. Annual revenues of GMCI NetComm are approximately $4 million.

Commenting on the merger, John R. Plohetski, President of Black Box Network Services - Dallas Operations, said, ``I'm delighted to have Greg Mizell and GMCI as a part of the Black Box family. Now I know what a team feels like when they sign their first round draft pick. Our future together will be a winning one.''

Greg A. Mizell, President and owner of GMCI NetComm, said, ``We are very excited about being part of the Black Box organization, sharing the same commitments to excellence and customer service. We will be able to increase our opportunities and product offerings to our customers and continue to give the best on-site infrastructure services. We are also looking forward to working with John and his group expanding the Dallas Operations.'' Mr. Mizell will serve as Vice President for Black Box Network Services - Dallas Operations, reporting to Mr. Plohetski.

This transaction is being accounted for as a purchase. The purchase price has not been disclosed.

Black Box is a leading worldwide technical service provider of network services and related products to businesses of all sizes, servicing 132 countries throughout the world.

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