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CEO: Digital's down, not out
By JEFF HARRINGTON, Times Staff Writer Like most chief executives of tech companies these days, Digital Lightwave's Bryan Zwan doesn't want to make promises about when his company's decimated sales might pick up. But Zwan offered one pledge to shareholders at the Clearwater company's annual meeting Monday: "We're not going to go the way of Enron. I can tell you that," Zwan said. Digital, which makes products to test and monitor fiber-optic networks, has been in a sales slump since last fall. Its stock, briefly a Wall Street favorite trading over $100 a share, has been stuck at historic lows this year, trading below $5 a share. Digital commands a leading 36 percent share of the U.S. optical testing market, but Zwan predicted demand in the country will be flat through 2003. Bigger opportunities lay abroad. Digital has a 5 percent share of the global market, competing against the same companies it does in the United States: Agilent, Acterna and Anritsu. Among its advantages, Digital is lean and flexible, having outsourced its manufacturing to Jabil Circuit of St. Petersburg. And it has an enviable balance sheet: no long-term debt, $45-million in cash-on-hand and a new $27.5-million credit line from Wachovia Bank. From that financial strength, Zwan is searching for companies and product lines to buy that fit with Digital. He also is pumping money into testing equipment catered to the "inevitable" growth of such fiber-optic uses as streaming video and video conferencing over the Internet. In its first quarter ended March 31, Digital posted a $5-million loss. Sales totalled $6.3-million, off 80 percent from last year but up slightly from the fourth quarter. "Although the market is down, it's not out," Zwan, the company founder and majority owner, said in his first annual meeting since returning to lead the company in January. About 35 shareholders attended the hour-and-a-half session at the Tampa Marriott Waterside, peppering Zwan with dozens of questions about the company's products and prospects for growth. One said he was abroad in missionary work and shocked upon his return to see how much money he had lost in Digital. But another, Margaret Gallagher of St. Pete Beach, said she made a lot of money when Digital's shares catapulted above $100 a couple of years ago and expressed confidence such glory days would return. "I think we should back the company," she said. Separately, shareholders approved a plan to eliminate the company's antitakeover provisions. That makes it easier for majority shareholder Zwan to buy another company or enter into other major business-transforming deals without delays to wait for the input of minority shareholders. Company officials said they needed the flexibility to move quickly if any deals surface. With Zwan's 60 percent stake in the company, approval was never in doubt. Shares in Digital closed Monday at $4.06, down 26 cents. -- Jeff Harrington can be reached at harrington@sptimes.com or (813) 226-3407.
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From the Times Business report
From the AP
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