Wireless distributor buys 9.1% stake in local firm TESSCO

November 21, 2007|By Allison Connolly | Allison Connolly,Sun reporter

The world's largest distributor of wireless phones and accessories has bought a significant stake in TESSCO Technologies Inc. of Hunt Valley.

Brightpoint Inc. purchased 470,000 shares - 9.12 percent of TESSCO - for $7.3 million.

In a filing with the Securities and Exchange Commission, Brightpoint indicated it was interested in more than just a mere investment in TESSCO. The filing said Brightpoint might engage other shareholders or members of the board to propose changes to TESSCO's "capitalization, ownership structure or operations."

TESSCO officials declined to comment on Brightpoint's share purchase yesterday.

TESSCO manages the supply chain for customers that design, build, maintain and use wireless products and accessories. It warehouses and distributes the nuts and bolts for everything wireless, from mobile phones to cell towers.

TESSCO founder and chief executive Robert B. Barnhill Jr. built the company on a business started by his father, a former radio parts sales manager who moved on to selling electronics to Westinghouse and General Electric.

TESSCO posted net income of $7 million or $1.17 per diluted share, on sales of $492.3 million for the last fiscal year, which ended April 1.

Robert J. Laikin, Brightpoint's founder, chairman and chief executive, said he is not looking for seats on TESSCO's board "at this time." But, he added, "the filing speaks for itself." He considers TESSCO's shares undervalued, which made it a good time to invest.

"We've followed TESSCO and ... Barnhill for many years," Laikin said.

With Google and Microsoft looking to introduce new wireless applications and products and big telecom companies laying down more fiber, Laikin believes the industry will "explode" over the next five years. He said there is untapped opportunity for wireless expansion in the U.S. compared with Europe, where most people already own more than one mobile device.

Brightpoint, based in Plainfield, Ind., became the biggest player in its field seemingly overnight, with two major acquisitions this year.

In March, it bought the assets of its U.S. rival CellStar Ltd., including that company's operations in Latin America. In July, the company purchased Europe's largest wireless distributor, Dangaard Telecom of Denmark. On a pro forma basis, combined revenue for Brightpoint in 2006 was $4.6 billion, with operating income of $106 million.

Brightpoint employs 3,300 while TESSCO employed 749 as of April 1.

TESSCO shares fell 69 cents yesterday to close at $15.60 a share. Brightpoint shares slipped 28 cents to $16.28.

allison.connolly@baltsun.com

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