News
Relm Wireless to acquire Uniden mobile radio assets Relm Wireless, West Melbourne, FL, is set to expand its two-way wireless communications business with several transactions.
The former Uniden Private Radio Communications (PRC) Division’s product line will become Relm’s when it buys all of the division’s assets under an agreement that, at press time, was close to being announced.
Uniden’s wider variety of portable radios and its trunked radio products will fill gaps in the Relm line. And although Relm has a line of mobiles, the technology platform for Uniden products is more advanced. Relm mobiles, popular with many users, are an old design and expensive to build, explained Relm’s president, Richard Laird.
“The margins are not attractive,” he said, speaking of the older mobiles. “With Uniden we can offer dealers a broader portfolio of products priced more competitively.”
The PRC division’s parent company, Uniden America, will become an original equipment manufacturer (OEM) supplier to Relm. After closing, the Uniden division’s sales and customer support functions will be relocated from Fort Worth, TX, to West Melbourne.
Relm is also expected to announce an alliance with Hitachi Denshi under which the two will define new land mobile radio products. Hitachi will manufacture those products, which Relm will market exclusively around the globe.
In connection with this expected announcement, knowledgeable sources indicate that Relm is considering the purchase of tooling for FM two-way radios that may strengthen its relationship with Hitachi. The tooling, along with some radio equipment inventory and ownership of the Midland International brand name, will be acquired from Midland International, a Canadian company not related to Midland USA. Midland International is owned by Simmonds Capital Ltd. (SCL), Willowdale, Ontario, Canada.
Midland International previously has licensed the use of the Midland name to several other companies, including New York-based Securicor Wireless (formerly Intek Global), a subsidiary of Securicor, Surrey, UK.
Securicor Wireless’s executive vice president, George Naspo, said that the company is going to discontinue the use of all of its brand names, including Midland, Intek Global, RoameR One and DataXpress-except for the name Securicor Wireless itself. At the same time, he said that there are no plans to sell or to discontinue the company’s license to the Midland name.
Housed in Hitachi facilities, the tooling Relm is to purchase will help Relm to offer Hitachi-made units with which many dealers already are familiar. In addition, Hitachi will help Relm to develop a new mobile radio that has been defined in meetings with existing customers and potential users in California. It will feature a dual control head, a trunk mount and LTR trunking.
“In our discussions with the Hitachi executives prior to engaging SCL, we were frequently urged to contact SCL relative to this tooling and inventory and, for that matter, expertise in selling these radios,” Laird said.
In December, Relm retained SCL to help with strategy and financing, and to speed product development.
David O’Kell, SCL’s executive vice president, added: “Purchasing the tooling, inventory and name from us would help to draw Relm closer to the Hitachi organization and would almost certainly speed the introduction of its future new product development.”
O’Kell said that the Uniden purchase would be funded with Relm’s available financial resources, and that a straight share placement or convertible debt offering may later be made to fund operations. The price to be paid for the Uniden division’s assets was not disclosed.
When the word “acquisition” and the name “Simmonds” come together, changes in the land mobile radio panorama sometimes follow. SCL previously has owned or controlled Glenayre and Kustom Electronics. It has had minority interests in Roamer One and Intek Global (prior to its renaming as Securicor Wireless).
In October 1999, Datamarine International, Mountlake Terrace, WA, retained SCL to assist with its wireless growth strategy. Within days, Datamarine signed a letter of intent to acquire the same residual assets of Midland International that Relm is expected to acquire. The agreement with Datamarine expired last fall, O’Kell explained.
In December, Relm hired Scott Henderson, who had been a long-time employee with Midland International when SCL bought that company. He advanced to president of its Midland Communications division and eventually left to work for the Uniden Private Radio Communications Division. He later returned to the SCL fold when he joined Roamer One. Henderson had been consulting SCL on acquisitions after leaving Roamer One.
With Relm, Henderson is senior vice president and director of the company’s Business and Industrial (B&I) Sector. He directs the development and sales of current B&I products and pursues related acquisitions.
In January, Thomas Morrow, former executive with EFJohnson and Motorola, joined Relm in a counterpart position to Henderson’s: senior vice president and director of the Government/Public Safety Sector. Morrow directs development, acquisition and sales of the sector’s products, including Project 25-compliant digital radios. His assignment includes completing two joint-venture initiatives designed to speed the introduction of high-end government products. One is Relm’s Project 25 development project with Racal. The other involves development of the new mobile radio with Hitachi.
Relm has been slimming down during the past two years, with most of its business reduction coming from divestitures of operating units and real estate. The divestitures have changed the company from a diversified business (a “mini-conglomerate,” Laird said) to one focused on land mobile radio.
Laird was obliged to forecast dismal results for the fourth quarter: a possible loss of about $2 million on revenues of about $3.3 million. And Relm has contracted to sell its West Melbourne facility, a transaction that will yield $1.4 million in cash and reduce operating expenses by $1.2 million.
“We are disappointed that certain substantial orders did not book in the fourth quarter,” he said.
Laird said that as much as three-quarters of Relm’s land mobile radio sales come from its BK Radio product line, and most of those sales are placed with four customers: The U.S. Forest Service, the U.S. Marshals Service, the NYC Transit Authority and the U.S. Army.
“It always was statistically possible that a quarter or two could go by when none of the big four might place an order, and that happened,” Laird explained. “When you have a few big customers like that, the consequences can be severe. I don’t think we’ve lost business, but for one reason or another, the orders were slow.”
The Relm chief said that the situation in the fourth quarter pointed to another reason why the Uniden acquisition was attractive: It broadens the product and the customer bases.
With worldwide attention focused on the convergence of wireless telephony and the Internet, why are Relm and SCL so interested in land mobile radio? “There still is a core demand base for two-way radio communications,” said O’Kell. “You have two large players moving on a lot of companies who are struggling. There is a need to build critical mass. There is a significant opportunity for a good product line with depth, well-priced and marketed to the dealers in a way that will help them build sales, keep customers happy and makes some money. In the near term, there is a significant commercial opportunity to feed the market on a replacement basis.”
Laird added, “It seems that as the market has grown larger, in the business and industrial category, existing suppliers have stumbled or lost their focus, and that creates opportunity.
“And APCO 25 is cracking the public safety market more. They’re using land mobile radio now in applications where they haven’t before,” Laird said.
A manufacturers’ representative familiar with the companies said that Uniden hasn’t had much effect in the market in recent years as it vacillated among direct sales, sales through reps and sales through distributors.
The rep, who carries a line that competes with Relm and Uniden, said neither company had shown much strength in the marketplace, relying primarily on price to compete.
“Relm has been selling to third-tier dealers,” he said. “They have never made an impact on the large, strong two-way shops. Perhaps with Uniden, if they market it properly, they might.”
Jeff Hall, business development manager for Hutton Communications, Uniden’s distributor in the United States, offered a much brighter assessment.
“Sales of Uniden radios have been going up. The outlook is positive. Uniden has a good radio product, and a lot of people don’t know everything it can do.” DB
Com-Net buys mobile business of Ericsson Private Radio Systems The Com-Net Ericsson Critical Communications (CECC) subsidiary of Com-Net, Pittsburgh, has acquired Ericsson’s Private Radio Systems (PRS) operations.
Com-Net plans to use the acquired business to offer land mobile radio customers, especially tax-supported municipalities, an alternative to owning and operating radio systems. Com-Net would finance, design, construct and maintain those systems under contract to their users. CECC will continue to sell two-way radio systems directly to customers who want to own and maintain their own systems.
Com-Net offers similar services to cellular and PCS carriers. Its initial business was constructing wireless antenna sites, switches and control centers for carriers. About two years ago, many carriers began divesting their sites to independent tower operators. Com-Net changed its strategy, too, becoming a tower and backbone infrastructure owner that leases sites and infrastructure to carriers. Several carriers may use the same infrastructure, reducing costs for each. It also saves carriers large capital expenditures and lets them focus on key activities of their business.
Last year, Com-Net realized that the same benefits could apply to the land mobile radio market. It formed a subsidiary, Com-Net Professional Mobile Radio, which was renamed as Com-Net Critical Communications, and after the acquisition, renamed again as Com-Net Ericsson Critical Communications. Com-Net recognized Ericsson PRS as offering an opportunity for vertical integration in land mobile radio as the company designs, builds, finances, implements and maintains a system throughout its life cycle.
With the acquisition, Com-Net, the parent company, will buy, finance and administer radio systems, and CECC will develop the technology, products and distribution channels.
The PRS business, with headquarters in Lynchburg, VA, employs more than 700 people and operates a worldwide network of dealers and distributors. The division had about $300 million of sales in 1999. Before the acquisition, Com-Net had 200 employees. Privately held, Com-Net does not release financial information; thus, neither its 1999 sales nor the price it paid for the PRS operations have been revealed.
Ericsson sold its PRS operations to concentrate on the convergence of mobility and Internet communications. To increase concentration on those markets, Ericsson has acquired and divested various business components.
“The company will be owned by someone spending all of their time and attention on the two-way radio industry and not being distracted by other businesses that are larger and more important to their core business, leaving us as a stepchild,” commented Mike Wolf, president of Eastern Communications, New York, CECC’s largest distributor. “Com-Net is dedicated to this industry, not cellular or other industries.”
Eastern sells Ericsson exclusively and provides maintenance and service for Ericsson products worldwide.
Wolf applauded Ericsson PRS’s and CECC’s new product developments that are beginning to be introduced under the “Jaguar” and “Panther” brand names. The new line, he said, has new features and technology with more competitive pricing and higher reliability.
“We were a part of that new product strategy,” Wolf said, referring to the Ericsson dealer advisory council, of which he is president. “We participate in shaping new directions of business including new product development and business strategies, including dealer relationships. Over the past year or so, Ericsson, with our input, has come up with this new product line concept,” Wolf concluded.
“We are very pleased to have entered this new business relationship with Com-Net Critical Communications,’ said Joe Hagan, Ericsson’s corporate financial officer. “Their leadership and focus will ensure the success of the business for our customers and our employees.”
To provide continuity throughout the transition for employees and customers, Ericsson will maintain a 20% equity ownership in the new company.
“The acquisition of Ericsson’s PRS operations manifests our strategy to become a vertically integrated provider of services to the wireless market,’ said Steve Savor, Com-Net’s chief executive officer. “We now have the ability to offer our customers a complete range of alternatives and solutions.”
Ericsson has placed its enhanced digital access communications system (EDACS) with more than 450 public safety, utility, industrial, commercial and government organizations worldwide, including the Kremlin in Russia, the French Naval Fleet, American Electric Power, the Denver International Airport and Miami-Dade County, FL. DB
Former Relm Wireless employees start new wireless company Entering the wireless market is a new company formed by two former Relm employees. Geiger Communications is the name of the company operating from Melbourne, FL.
John M. Biljan, who served Relm Wireless for 14 years in positions including vice president of product development and vice president of sales and marketing, will spearhead the new company.
“With the industry being so huge and new technologies emerging constantly, we are very excited about our future. We will concentrate on technologies such as AVL and GPS, which open new markets by providing new and existing users with tools to manage their business. Our antenna division will market products through conventional distribution channels,” Biljan said.
Joining Biljan is Gary A. Baugh as vice president of operations. Baugh, who has held several positions such as director of quality assurance, director of manufacturing engineering and plant manager during 22 years with Relm Wireless, brings operating knowledge to Geiger.
The company plans to introduce a complete antenna and duplexer line; an AVL/GPS system that includes hardware and software; and a power supply line.
FCC Notes
‘Strike up the band’ The FCC will proceed this Spring with the auctioning of the first 30MHz of commercial spectrum located in the 700MHz band. This is the spectrum that will be freed by the relocation of commercial TV broadcasters (channels 60-69). On January 6, the FCC adopted licensing and service rules for operation of spectrum in the 746MHz-764MHz and the 776MHz-794MHz bands. To comply with Congress’s stipulation that public safety users in the 700MHz band be protected from interference, the FCC adopted guard bands comprising 6MHz of spectrum. Public safety entities have previously been assigned the 764MHz-776MHz and 794MHz-806MHz bands currently occupied by UHF channels 63-64 and 68-69, respectively. The commercial spectrum will be auctioned in two paired segments, one of 4MHz and one of 2MHz. The Wireless Telecommunications Bureau is soliciting technical comments on operational issues relating to the two guard band licenses.
The two commercial license bands established will be 20Mhz (two paired 10MHz bands) and 10MHz (two paired 5MHz bands). Potential use for the spectrum includes high-speed Internet access, broadband, third-generation (3G) wireless services or certain broadcasting services.
The auction will be broken into six economic area grouping (EAGs) across the United States. The commission is not restricting bidding entities from acquiring a duopoly in any EAG or from aggregating spectrum across EAGs. In a separate statement appended to the Report and Order, Commissioner Harold Furchtgott-Roth said he must “…part company with my colleagues on the item’s approach to our statutory obligation to craft rules which protect public safety licensees from harmful interference. Rather than the creation of so-called ‘guard bands,’ I would have been inclined to resolve our mandate by establishing strict interteference limits with significant penalties for non-compliance,” he said. ‘Give me your poor, your tired-your licenses…’
In December, the U.S. Second Circuit Court issued an opinion negating bankruptcy protection for Nextwave’s PCS licenses and upholding that the FCC and the federal Appeals Courts have exclusive jurisdiction over communications licenses. The court decision confirmed the FCC’s position that when a licensee by auction fails to pay its obligations on time, the license can be revoked and reauctioned. Accordingly, on Jan. 12 the FCC filed objections to NextWave’s modified plan of reorganization in bankruptcy court. In the filing, the FCC said that pursuant to its rules, NextWave’s licenses have been canceled. The FCC also issued a Public Notice announcing that these licenses will be part of a July 26, 2000, C and F Block Broadband PCS auction.
‘You’re a mean one, Mr. Grinch’ In a December ruling, the FCC denied petitions for reconsideration of its Memorandum, Opinion and Order (MOO) on auctioning of the upper 200 channels at 800MHz filed by Small Business in Telecommunications (SBT) and the American Mobile Telecommunications Association (AMTA). In the ruling, the FCC affirmed its decision to eliminate installment payments for small business entities. The ruling held that Congress has not dictated that installment payment be the only tool in assisting small business, even if it did recognize them as one means of providing small business access to spectrum. “Our experience with the installment payment program has led us to conclude that installment payments may not always serve the public interest,” the ruling said. It added that the commission has determined that “… installment payments should not be used in the immediate future as a means of financing small business participation in our auction program.”