Dynamism, uncertainty in wireless

Tessco: A Hunt Valley wireless-equipment distributor faces the benefits and risks of the constantly changing telecommunications industry.

January 23, 2000|By Mark Ribbing | Mark Ribbing,SUN STAFF

They are, quite literally, the nuts and bolts of a multibillion-dollar industry.

Or, to be more precise, the hex nuts and the pal nuts, the U-bolts and J-bolts and concrete base bolts. The little metal fasteners sit in small bins stacked near the conveyor belt, which snakes along the warehouse floor like a clattering, metallic river.

These nuts and bolts are destined to become part of the emblematic gizmos of the Communications Age, the mobile phones and cell towers that have changed our physical landscape and our methods of interaction.

The warehouse belongs to Tessco Technologies Inc. of Hunt Valley, a distributor of equipment for the wireless communications industry. That industry is constantly growing and changing, and Tessco -- more than perhaps any other company in Maryland -- exemplifies the sector's dynamism and uncertainty.

Stuart M. Wyeth, an analyst who follows Tessco for Offutt Securities Inc. in Hunt Valley, said, "It's a tough business until you build enough sales to be a dominant, dominant player. And that's where [Tessco is] going."

Tessco, which has 380 employees, also serves as a ready example of a midsize company struggling with the constant changes of the modern American economy.

In Tessco's case, this struggle has been generally successful, but it is seldom easy: Good workers are hard to find; it's nearly impossible to get the attention of a Wall Street infatuated with dot-com whiz kids; customers are impatient and becoming more so; the same Internet that creates wonderful new business opportunities also threatens to make you irrelevant.

Tessco operates "in an area that's very difficult," said William W. Benton, an analyst for William Blair & Co. in Chicago. Specifically, the company is trying to carve a niche for itself as a distribution middleman between the big wireless-equipment manufacturers and the thousands of companies and individuals who use that equipment.

It's a potentially lucrative position to be in, but it's also an insecure one in a communications industry and an international economy that are shifting course faster than ever.

Robert B. Barnhill Jr., Tessco's chairman, president and chief executive officer, came by the communications-gear business naturally; his father, also called Bob, was a radio-parts sales manager who installed the first two-way radios on railroads in the 1940s.

In 1952, the elder Barnhill started the business that would eventually be known as Tessco. Back then, the company was essentially a local sales representative, hawking parts to electronics firms like Westinghouse and General Electric; the notion of people sitting in cafes with wireless telephones was the stuff of futurists' dreams.

But change was coming, and the founder's son caught an early and tantalizing whiff of it. In the early 1970s, the family company -- then known as Barnhill & Associates -- began selling for a fledgling concern called Intel. The younger Barnhill recalls being in a smoky room at the City Squire Hotel in New York, watching Intel founder Robert Noyce explain the business potential of an exotic-sounding thing called the microprocessor.

Barnhill's father bit, investing $50,000 in Noyce's venture. After Intel went public in 1971, the value of the stake doubled and the veteran radio man sold his shares, turning a tidy profit and utterly missing out on the 2,400-fold growth that Intel's stock has enjoyed since. In the new world of communications, playing it safe can be the biggest risk of all.

It's a lesson that the younger Barnhill, who bought the company in 1975, repeats to himself constantly. Though not an especially grim man by nature, the sandy-haired, mustachioed 55-year-old is given to the occasional Corporate Darwinist pronouncement: "Every day you have to reinvent yourself as a company or you will be cannibalized, and you have to be prepared to constantly cannibalize yourself so you can renew and then continue to grow back," he said in a recent interview at Tessco's plush headquarters.

He acted on this ethos early, transforming the company into a distributor of wireless phone equipment. Tessco supplied antennas for one of the first wireless networks in the United States, the Cellular One service established in the Baltimore-Washington market in 1983.

At the time, the mobile phone was widely viewed as a fad, an outlandish geegaw that would soon go the way of the CB radio. Barnhill saw the potential of the technology and bet his business on it. He said his enthusiasm for cutting-edge gadgetry stems in part from heredity, but also from a seemingly unlikely source, his difficulty with reading.

"I'm dyslexic, so it's tough for me to put hand to pen, so I've always kind of pushed the envelope in terms of where technology is going to take people," he said. For example, Barnhill composed his master's of business administration thesis at the University of Pennsylvania's Wharton School by dictating it into a tape recorder and having it transcribed.

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