Man with a hot company RWD Technologies is young, growing and making money

July 23, 1998|By Mark Guidera | Mark Guidera,SUN STAFF

It's said revenge is a dish best served cold, but Robert W. Deutsch's plate is hot.

Columbia-based RWD Technologies Inc., which Deutsch founded 10 years ago after he was forced out of another company he had launched, has been seeing revenue and profit soar in the past year as Fortune 500 companies such as Chrysler Corp. and Merck & Co. have signed up RWD to help train workers to install and use sophisticated computer systems and software.

Yesterday, RWD reported its fourth consecutive profitable quarter since going public a year ago.

The company said it booked $27.4 million in revenue for its second quarter ended June 30. That's 32 percent more than in the same quarter last year, for which the company reported revenue of $21 million.

Earnings surged to $3.2 million in the quarter, or 20 cents per diluted share, 45 percent more than in the 1997 quarter and 2 cents more than analysts had estimated.

For the first six months, RWD earnings are up 53 percent over 1997, at $6.1 million on sales of $39.8 million, up 34 percent.

Shares of RWD, which went public at $13 a share in February 1997, closed yesterday at $21.87, giving the company a market value of $323 million.

The strong numbers for the first half of the year come on the heels of the company's record revenue of $85.6 million in 1997. Revenue has risen more than 30 percent annually since 1995.

Can the company sustain the breathless growth pace? Founder Deutsch thinks so.

"Thirty percent growth should not be a problem," he said. "We're in a niche business where the competition's not that great, and we're not expensive. I can see us becoming a billion-dollar company in the next decade if we can get the right people and the economy stays good."

But strong competitors abound. Among the ones RWD faces in the computer integration and support industry are IBM, NCR and Arthur Andersen Consulting.

Deutsch, a former nuclear engineering professor at Catholic University, is gratified by the 900-employee company's fast growth and success in the face of such competition. The JTC company has offices in 13 states and one in Europe.

Revenue has surged, said RWD's chief financial officer, Ronald E. Holtz, primarily because of two of the company's services.

First, demand has exploded for the company's support service, which teaches employees at big companies how to install and use enterprise resource planning software.

Such "enterprise" systems allow companies to consolidate all departmental systems into one.

RWD's enterprise support service grew almost 100 percent in the first three months of this year compared with the same months of 1997, said Holtz.

Meanwhile, demand for the company's "lean manufacturing" service, which helps workers at big manufacturing operations develop training and other materials for sophisticated computer systems and related technologies, is up more than 60 percent this year. In an example of this booming niche service, RWD helped its largest customer, Chrysler, train workers to use a computer system that helps assemble new cars and auto parts.

"We take complex technology and make it easy for the worker to understand and use," said Holtz. "In the end, that improves worker productivity."

Deutsch said, "I knew this company would be a success because for a long time I'd been seeing how frustrated managers get when a company brings in new technologies, but it doesn't relate to better productivity. The reason is simple: They forget about the people who will use it."

RWD was built on bridging the gap between technology and the people who use it, he said.

To achieve that, Deutsch has no sales or marketing staff. Instead, RWD relies on computer engineers and other experts to dissect customer troubles and develop solutions from the front-line worker's perspective.

"Our engineers are our best sale people," he said, "because they are the ones who understand the technologies and the problems a customer is facing."

Another Deutsch strategy is keeping management layers lean, creating new divisions once a team gets too big. That, he reasons, keeps in-house competition down and team spirit up.

At 74, Deutsch, a longtime Pikesville resident, still rules the roost at RWD as chairman and chief executive, showing up for work each day in person or by computer from his Palm Beach, Fla., vacation home.

He and his family maintain shareholder control of the company, too. They hold more than 60 percent of the shares.

Deutsch relishes being able to build a successful venture so quickly -- it turned a profit in three years -- after getting the boot from another company he founded, General Physics Corp., also based in Columbia.

In 1987, National Patent Development Corp. bought a majority stake in General Physics and offered Deutsch a golden parachute.

He sold his family's 24 percent stake in General Physics for $18 million and launched RWD three months later.

"I'd worked in Florida for a time and saw what retirement was all about: You don't do anything," said Deutsch.

"Besides, I knew exactly what I wanted to do."

Pub Date: 7/23/98

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