Despite company's woes, Essex chief is optimistic

June 22, 1993|By Ted Shelsby | Ted Shelsby,Staff Writer

There's no doubt about it, Harry Letaw Jr. is a class A optimist.

In one breath yesterday, the chairman and chief executive of Essex Corp. told shareholders about company losses, a 50 percent drop in sales over the past three years and the fact that the company's major bank was about to fly the coop.

In the next breath, he was projecting a three-fold growth in revenues by the end of 1995, accompanied by a 15 percent annual return on stockholders' equity.

"We have a growth plan," Mr. Letaw told the 30 or so shareholders who attended the company's annual meeting at its corporate headquarters in Columbia.

He acknowledged that it all added up to a "sweaty-handed" situation,

but expressed confidence that the diversified, technology-based company was on the road to recovery.

His optimism was based on the company's promising technology that, he said, he wouldn't sell for $10 million.

One product is its ImSyn system, which features off-the-shelf hardware in place of expensive software to achieve super-computer processing speeds. Essex is looking at applying the technology to the medical industry to speed and enhance the processing of images produced by CT or magnetic resonance imaging scanners.

It also has potential for use in fighter-plane radar and is being considered for use in examining baggage and freight containers for contraband as well as locating cracks in welds and structures."Essex is a small company that is losing money; however, the potential is huge," Bob Acker, wrote in a recent issue of The Acker Letter, an investment newsletter that follows small capital stocks. "There's a downside risk here, but if the technology is successful ImSyn could turn out to be monstrous."

Mr. Acker referred to Essex yesterday as a "brain-rich company" that has "the technology that stands to revolutionize several industries."

Concerning the previously disclosed problem with company's major lender, Signet Bank/Virginia, Mr. Letaw said a recent agreement with the bank called for reducing its loan commitment from $1.8 million at the end of the first quarter to $900,000 by September, when its final payoff is scheduled.

He said Essex was working to find a new lender to finance the company's future business growth and was also looking at alternative sources of financing.

In one possible alternative, he said Essex has retained Advent International Financial Services Inc., a Boston investment banking and venture capital firm, to help in the company's search for partners who could assist in bringing the ImSyn systems to market.

Another possibility, Mr. Letaw said, would be to sell off certain assets of the company.

Cuts in the military budget and delays in the awarding of government contracts as a result of the change in administrations have resulted in "tough times" for Essex, which has about 140 employees in Columbia, McClean, Va., and Huntsville, Ala., Mr. Letaw said after the meeting.

Essex posted a loss of $331,000 last year on sales of $12.5 million.

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.