OLD APAT-NEW, LEAN COMPANYNow at 1.03
I have talked to the CEOwho is running the company and I like what she had to say. They alsohave a new patented connection gizmo that they have already worked intotheir production lines and it is both saving/making them money pluscustomers love it because it is making installs so much easier. Theseguys look good to me here now that the optics stuff has been sweptaway...projections for their niche are very strong and i think theyhave found their sweet spot...11.8m shares out-this is an article froma local paper--
B: Clearfield: Newly wired for profit ( McClatchy-Tribune Information Services -
Jan 14, 2008 (Star Tribune - McClatchy-Tribune Information Services via
COMTEX) --
The wind-swept snow that blanketed the entrance to the red brick building
that is home to the new Clearfield Inc. could just as easily stand for the
brutal business storms that recently prompted the former APA Enterprises Inc.
to ditch its name and some of its longstanding lines of business.
Gone are the APA name and a 30-year legacy as a money-losing, high-tech
maker of precision optical lenses and ultraviolet-light detectors. Instead,
the renamed firm is celebrating its first quarter of profitability in a long,
long time.
APA founder Anil Jain resigned as CEO last summer. The company's board shed
the optical and ultraviolet business and set a new course as an independent
copper and fiber-optic equipment firm that caters to rural phone companies.
Inside the Plymouth factory, 107 workers snip, grind, polish and fit the
ends of glass fiber-optics for customers such as Paul Bunyan Telephone Co., 3
Rivers Communication, Heart of Iowa Communications, Pioneer Telephone
Cooperative and Rural Telephone.
"This is the new world. It's fun to be able to take it to the next step,"
said the company's new president and CEO, Cheri Beranek Podzimek.
Clearfield's intent is to become a bigger player in the rural $3 billion
"fiber-to-the-home" market.
Most phone companies have spent the last 10 years updating miles of cable
from copper to significantly faster fiber optics. They brought the high-speed
cable as far as neighborhood junction boxes but failed to go all the way into
the home because of cost.
Now that costs have dropped, that "last mile" of "fiber-to-the-home" is the
goal for Verizon, Sprint, Qwest and the nation's 1,100 independent phone
companies. Consumers are demanding faster speeds for their Internet, HDTVs,
video, and phones.
Clearfield's connectors, splitters, junction boxes and other equipment are
helping small phone companies such as Bunyan reach that goal while helping
Clearfield become profitable again.
Two weeks ago, the company changed its fiscal year and posted a $119,000
profit for the fourth quarter, which now ends Sept. 30 (in conjunction with
the construction season). A year earlier, APA lost $400,000 in the same
period. And it lost $1.29 million between March and September.
But those losses flow from the old APA, Podzimek insisted. Without APA,
Clearfield's earnings rose and revenue jumped 9.5 percent to $5.39 million
for the quarter.
Investors are cautious but pleased. They bid up the stock from 79 cents a
share to $2 for a time, though it has since settled near 82 cents on
recession concerns.
"We are happy with that 10 percent" revenue growth, said Podzimek, who has
led various parts of the cable equipment firm since APA bought it as a
division in 2003. Sales have since climbed from $11 million to $20 million.
Rural phone companies expect Clearfield's sales to grow even more.
"For [Clearfield], the market is probably going to grow exponentially," said
Brian Bissonette, marketing supervisor of the Paul Bunyan Telephone Co-op.
"We were one of the first to [upgrade] a city the size of Grand Rapids [with
fiber]. But more and more independents like us and even the traditional
out-of-the box [firms] like Qwest and cable companies and the big boys like
Verizon are deploying a lot more fiber to the home. "
Industry experts such as research firm RenderVanderslice & Associates and
the Fiber-To-The-Home Council recently reported that the fiber-to-the-home
market doubled last year from 1.2 percent of U.S. homes to 2.2 percent. More
than 2 million U.S. homes have that next-generation broadband cable.
Rural phone companies are seeing greater demand.
With fiber, "you get to have HD and multiple HD streams in people's homes"
because they have more capacity than coaxial cable or copper wire, Bissonette
said. Copper, which phone companies have traditionally used for the last mile
into the home, "limits what Internet speed we can deliver. So anybody
upgrading their network is seriously looking at going all fiber."
Clearfield recently won its first international accounts after signing with
distributors in Canada and Europe. The new markets are expected to help fill
the revenue gaps that have developed for the company because of slowing home
construction.
At the same time, Clearfield slashed its production costs by 20 percent by
adopting new fiber-optic harnessing technology and by manufacturing more
products overseas.
Longtime investor and board member Stephen Zuckerman said he is optimistic
that Clearfield can succeed.
"I think there is an expectation that we will really take the company and
eliminate all the losing components and get rid of all the [APA] inventory
that needed to be written off and that we will be profitable," he said.
Podzimek and Chairman Ron Roth are "bottom-liners, and they know how to get
there. And now they have an engine that seems capable of taking them into
profitability long-term," Zuckerman said.
"The one thing that may be their problem is that housing is going to be
down. So new cable to home is obviously going to take a hit."
Roth, former CEO of Waste Systems Corp., bought 75,000 shares in December on
the open market after buying 68,000 in August.
Clearfield will remain focused on phone companies that serve rural
developments, Podzimek said.
"We only go after the little guys. And they are still a huge chunk for us to
go after," she said. The U.S. market for rural fiber-optic connectors is
estimated to be worth $3 billion, with 1,100 small phone companies that need
the connectors, splitters, wire housing cabinets and other equipment that
Clearfield and competitors provide.
To broaden its appeal, Clearfield introduced its new easy snap-in wire
harnessing cassette technology called Clearview in October and plans to offer
phone companies a better "second generation" version this week, Podzimek
said. The technology cut Clearfield's wire packaging costs by 20 to 25
percent and been well-received.