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TAMPA - The boss is back in the board room at Digital Lightwave.
By JEFF HARRINGTON
© St. Petersburg Times, published October 27, 2001
TAMPA -- The boss is back in the board room at Digital Lightwave.
Bryan Zwan, founder and former chairman of the Clearwater company, rejoined the board at its annual meeting Friday. The move came just two days after he settled a longstanding feud with the Securities and Exchange Commission over alleged accounting irregularities.
Not that Zwan's election to the board was ever in doubt: He owns 58 percent of Digital stock.
Zwan, who ranks among the wealthiest investors in the Tampa Bay area, hasn't been reluctant to wield his controlling stake in the past even after he had left the company in August 2000. Last year, he dispatched attorneys to block a stock option plan that wasn't to his liking and to add his own representative to a company-backed slate of directors.
In a brief interview after Digital's meeting, Zwan said he will offer strategic advice as a director but does not plan to re-insert himself into management. "If I wanted to operate the company, I would have come back in a different role," he said.
Zwan said he has faith in president and chief executive officer Gerry Chastelet, who was recruited 2 1/2 years ago to turn around the once-hapless company. Chastelet has outperformed expectations, at least until recently.
Digital, which makes testing equipment that troubleshoots fiber-optic networks, was one of the hottest stocks on Nasdaq in 1999 and closed 2000 as the best-performing public company in the bay area, according to the St. Petersburg Times' annual Times 50. It was on a strong streak of building revenues this year until a precipitous drop in the last quarter.
The SEC had accused Zwan and the Clearwater company of filing false financial reports for two quarters in 1997. Digital Light-wave settled its part of the case last year, but Zwan's attorney, Bob Freitas, said his client refused to settle until regulators agreed to drop all fraud charges against his client as part of the deal.
"I'm very happy to have that behind me," Zwan said of the SEC probe.
Zwan's personal ties to the Church of Scientology had marked Digital by some as a Scientologist-affiliated company. Chastelet has taken pains to distance the company from Scientology, even relocating its headquarters further away from Scientology's downtown Clearwater headquarters. "This is not a religion-oriented company," he said Friday.
Zwan said he is still a Scientologist but called that a "non-issue" in how the company has been run or will be run. "Religion is not a factor in the company," he said.
The return of Digital Light-wave's founder comes at a pivotal time. After dodging a widespread industry downturn through most of 2001, Digital suffered a tough blow in the quarter ended Sept. 30.
Revenues plummeted 68 percent for the period, leading to a $4.1-million loss. Forty-two jobs were cut, leaving a work force of about 160. The company is taking a $500,000 charge on earnings this quarter. The company's stock, which traded as high as $150 a share in March 2000, closed Friday at $6.96, up 15 cents.
"We're in a global recession that has hit virtually every industry," Chastelet told about 50 shareholders and employees who attended the annual meeting at downtown Tampa's Marriott Waterside hotel. "People are still scared. People aren't making decisions. And we're dealing with a new kind of war."
Chastelet said he does not want to capitalize on the Sept. 11 tragedy but nevertheless sees some opportunity in an emerging new world of business.
A reluctance to travel will likely mean more electronic conferences and more video conferences over the Internet. People afraid of anthrax may forsake traditional mail and turn increasingly to e-mail.
All of which drives use of the Internet and, in turn, a need for Digital Lightwave's testing equipment.
Unlike last year's meeting, Chastelet's chart-filled presentation did not include any revenue goals for the upcoming year or even a pledge to do better. Blame the uncertain economy.
"I can't promise you growth," Chastelet said, "but I can promise you we will do better than our competitors."
-- Jeff Harrington can be reached at harrington@sptimes.com or (813) 226-3407.