[Engineering Feature]
Key Companies Shake Up This Year's Top Employers
It’s a tough time for the industry, but several companies have grown and even thrived despite the recession. A closer look beyond the numbers shows how they achieved their success.
A bit less than 80% of Altera’s sales are generated overseas, especially in Japan, and its silicon wafers come from Taiwan. Even though the company focuses on currency hedging and pays for most materials and services in U.S. dollars, political, currency, and regulatory risks always exist that could disrupt business.
In addition, Altera relies mainly on Taiwan Semi for silicon supplies, and over half the product cost of the chip is in the silicon. Any significant silicon shortage would severely impact delivery dates and profit margins.
ADTRAN CONNECTS TO SUCCESS Adtran saw a big bump as well, rising 51 slots from 95 in 2007 to 44 in 2008. It began operations in 1986 following AT&T’s divestiture of the regional Bell operating companies (RBOCs). This created an opportunity for companies such as Adtran to supply network equipment to the seven RBOCs as well as the more than 1300 independent telephone companies in the U.S.
The company is a global provider of networking and communications equipment. Its end-to-end solutions are deployed by some of the world’s largest service providers, distributed enterprises, and small and medium-sized businesses. These more than 1700 products enable voice, data, video, and Internet communications across copper, fiber, and wireless network infrastructures.
Adtran’s Carrier Networks division has product and service offerings specifically for Ethernet and Internet Protocol-based networks. Service providers such as AT&T, Verizon, and Qwest use Adtran equipment to connect central offices or remote terminals directly to the subscriber’s terminating equipment.
The Enterprise Networks Division supplies small and mid-sized businesses, as well as distributed enterprise customers with the internetworking equipment needed to create sophisticated localarea networks (LANs) and wide-area networks (WANs). Adtran’s products are made available through a network of global resellers and distributors. The company is based in Huntsville, Ala.
Adtran showed year-over-year improvements in just about every category used in our rankings. It also showed improvements of two points or more in employee growth, sales growth, pretax income growth, pretax income margin improvement, long-term debt to shareholder’s equity ratio, closing stock price to high stock price ratio, and R&D expense growth. In addition, it scored five bonus points from the 2008 Electronic Design Reader Survey.
Keep in mind that this year’s rankings are in some cases strongly influenced by the recession and negative economic climate. Companies can improve their rankings, not necessarily by strong results on their own, but by relatively weathering the negative economic impacts more fortuitously than their brethren. In Adtran’s case, it also produced very positive results on its own.
Adtran is well positioned for growth in both wireline and wireless broadband access as well as optical access, especially as it relates to the “last mile,” the final leg of delivering connectivity from a communications provider such as a cable or phone company to a customer.
Enterprise networking is also a substantial growth area, as the need keeps growing with businesses continuing to spread themselves out globally, with more branch locations, numerous remote offices, and even home offices and mobile workers. In addition, enterprises are more “fluid” than ever. An employee may be working at the main campus one day and from a remote location the next. This means all work centers are now business-critical and require consistent, secure, high-performance IT networking services.
The company’s Total Access 5000 broadband multi-service access and aggregation platform is currently approved by 60 carriers, including the top eight in the United States (Fig. 3). Several of its NetVanta networking products won innovation awards, Editor’s Choice, and Product of the Year awards from leading IT publications.
Fortune magazine named Adtran to its “40 Best Stocks to Retire On” list and noted it as one of five newcomers featured in its Small Wonders list. Also, Forbes again named the company one of the “200 Best Small Companies 2008,” a ranking based on return on equity, sales growth, and profit growth over both a 12-month period and a five-year period.
According to market intelligence firms Dataquest and International Data Corporation, Adtran currently holds revenue-leading positions in the integrated access, frame relay/DDS, ISDN extension, and HDSL/T1/E1 network and access markets. The company is ISO 9001 and TL9000 certified as well.
The largest risk to Adtran would be a complete slowdown by major carriers and businesses with respect to IT spending related to networking and broadband access. While these effects tend to mirror economic cycles, hopefully we have seen the worst of the current recession. Business and consumer demand for these products and services continues to increase.
Another risk is the fact that 62% of Adtran’s 2008 revenue comes from four customers: AT&T (24%), Qwest Communications (16%), Verizon (12%), and Embarq (10%). For example, to better focus its tech strategy, AT&T is cutting its list of vendors from about 150 companies to somewhere around 40. There is speculation that while Adtran has a strong hold on AT&T’s highspeed DSL business, it could run the risk of losing the optical race to companies like Fujitsu or Alcatel-Lucent.
EATON POWERS INTO TOP 10 Eaton Corp. moved up from its 2007 position at 51 to eighth place in 2008, leaping 43 places. This diversified power-management company specializes in electrical components and systems for power quality, distribution, and control; hydraulics components, systems, and services for industrial and mobile equipment; aerospace fuel, hydraulics, and pneumatic systems for commercial and military use; and truck and automotive drivetrain and powertrain systems for performance, fuel economy, and safety.
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