GRAHAME RANCE - SBS TECHNOLOGIES INC (SBSE)
CEO Interview - published 09/10/2001

DOCUMENT # NAA611

GRAHAME RANCE was announced as the new President and Chief Executive
Officer of SBS Technologies, Inc., on March 9, 2001. His work experience
includes executive management responsibility at Caspian Networks in San
Jose, CA, and Nortel Networks globally. Before joining SBS Technologies,
Inc., Mr. Rance was President & CEO of Caspian Networks from October
1999 to March 2001. Mr. Rance held a number of key executive roles in
his 17 years with Nortel Networks. His last assignment was Vice
President and General Manager of Succession, Nortel's high-profile
public network infrastructure. From 1993 to 1996, he served as Managing
Director of Nortel South Asia, headquartered in New Delhi, and was
responsible for establishing and developing Nortel's business in the
region. From 1989 to 1993, Mr. Rance was head of Nortel's data
networking division across Asia Pacific, based in Australia and
Singapore. From 1982 to 1985, he held product line management roles at
Nortel's data networks division headquarters in Ottawa, Canada, with
positions in technical operations and marketing. In addition, he
acquired marketing expertise serving as Nortel's US data networks
Marketing Director from 1986 to 1989.

Sector: communications

TWST: We'd like to begin with a brief overview of the history and
evolution of SBS Technologies, Inc.

Mr. Rance: SBS was formed in the mid-1980s, and its original business
was focused on aerospace avionics flight simulation. Then in the early
1990s the company started to expand through a number of acquisitions and
branched into other market areas focusing on commercial business. About
18 months to two years ago, SBS Technologies entered into the
communications market. As a result SBS addresses three markets today:
communications, commercial and government.

TWST: Would you care to break down what each of those segments means as
far as focus on business right now?

Mr. Rance: Our plan going forward is that revenue will be comprised of
40% communication, 40% commercial, and 20% government.

TWST: As you look at the landscape right now, where do you feel you
stand in relation to your competitors in these different sectors?

Mr. Rance: We see different competitors in each of the market sectors.
One of the things that SBS is focused on, which I believe gives us an
edge over competitors, is that we focus on time-to-market for our
customers. We have the flexibility in offering custom designs, which
means SBS delivers new technology for our communication customers within
nine months. Our flexibility gives us a major competitive edge.

TWST: As far as products and services are concerned, do you have
anything coming down the pipeline that is going to help keep the company
on a specific track over the next couple of years?

Mr. Rance: One of the areas of focus for us is getting more of the
design outsourcing of our customers. A lot of our customers are starting
to outsource their hardware designs, and we are being selected for their
embedded computer solutions with the acquisitions over the last five
years. We now have a broad range of technologies across SBS that enable
us to provide more of the hardware solutions to our customers. That's
where we're focusing our attention going forward ' taking on more and
more of that hardware design. What that will do is enable us to keep
pace with technology and also to be at the leading edge of technology
with our customers.

TWST: Who makes up, primarily, your customer base? It seems very
diversified at this point?

Mr. Rance: We have approximately 1,000 customers spread over many of the
markets that we serve. On the communications side ' that's a clearly
defined sector -' it's typically the vendors that provide networking
technology that is sold and deployed into the carriers' networks. SBS
designs work of embedded computer solutions for the vendors, who then
take that and incorporate it within their total network solution that is
sold to the carriers. In the commercial sector, you can break it down by
industry segments, and we have a large number of customers in the
semiconductor side of the business and the medical field. There are many
different industrial markets and we feed into a large number of those
sectors. In the government market, we have a customer base that is the
envy of most of our competitors because we have all the top names, not
just within North America, but in Europe as well, that are working on
government contracts. And, once again, our technology is taken by those
customers and incorporated into their total solution that they provide
into the military.

TWST: As you look ahead in the next couple years to the market as a
whole and the sectors that SBS is involved in, what trends do you see
emerging that you are going to want to take advantage of?

Mr. Rance: One of the areas that we are focusing on very carefully is
the communications sector. There is definitely going to be change to the
network infrastructure over the next 10 years, not just within North
America but on a worldwide basis. If you take the telecommunications
networks today, you find TDM technology for the voice, lots of data
networks that use the IP protocol, and separate video networks. The
desire for carriers is to create one network instead of running multiple
networks. Our customers have to develop the technology to fit into that
network solution for the carriers ' the convergence of voice, data and
video. SBS wants to do more and more of the design work for our
customers as they deploy that technology over the next few years. Once
that technology is available across a complete network, you will see
significant growth in the communication sector as they change out the
networks. This infrastructure allows carriers to reduce their capital
expenditures and it will also significantly reduce their operational
expenditures.

TWST: Will there be some significant changes that the company will have
to make to ensure that it takes full advantage of that growth over the
next 10 years, or are you pretty well positioned right now?

Mr. Rance: No, we have made some changes, and some of the changes are
significant. We currently have three lines of business, where each one
had its own sales organization and a customer could interface across
several of the lines of business. As a result, the customer would see
more than one salesperson because we provide solutions in different
areas of their business. Some of our customers are extremely large,
where one salesperson is dealing with one group within the customer, and
another salesperson is dealing with another group within the same
customer. We have made a significant change in creating one sales
organization that will focus on providing full service to our customers.
As a result our customers have one SBS 'touch.' Also we have stepped up
our marketing activity to improve and increase the brand awareness of
SBS. Our objective is, over the next five years, to create the
infrastructure within the company to enable us to achieve accelerated
market growth ' to take us from where we are today at $187 million
revenue to $1 billion within a five-year period. And we've created an
organization now that I believe will take us there.

TWST: Is your balance sheet such that you can make sure to accommodate
these endeavors to your liking?

Mr. Rance: Yes, it is. We have cash, and we have good cash flow. Our
objective is to maintain good cash flow going forward, and we are
comfortable that we can achieve and execute our plan.

TWST: Are you still in an acquisition mode? You had mentioned that they
were important, at least in the last five years or so as far as
developing the company. Is that something you are still looking to do?

Mr. Rance: Yes, we are still in an acquisition mode. Now is the perfect
time to do acquisitions as well because companies are coming down to a
realistic valuation. So the expectations that we were seeing on the
value of a company six months ago are not there today ' they've come
back down to more realistic levels. We're looking at companies where
their technology is complementary to SBS' technology and that will
enable us to achieve more of the outsourcing of the hardware design of
our customers. Also we are looking at companies that are accretive to
SBS. So, yes, we will continue acquisitions. We're currently completing
the plans to do a number of acquisitions over the next six to 12 months.

TWST: Looking ahead over the next two or three years, what would be a
realistic expectation as far as a rate of gain in sales and earnings?

Mr. Rance: It's difficult to give you that since we've not given any
guidance. We've built the plans and we also have the models. We're now
executing against the plans, and we feel that the communications market
business will be flat for the next six months. But we see communications
starting to pick up, so in the early part of 2002 calendar year we will
start to see communications improve, and then that combined with our
other businesses, the commercial and the government side, we see
significant growth going forward. Two years from now we see the
communications growing in the 30%-40% range. Looking out two years, we
see the commercial market growing at 16%-19%, and government in the
10%-15% range. So, overall, we are very enthusiastic about the future.

TWST: On the risk side, what's out there aside from say the general
economy that might cause you to lose a little sleep?

Mr. Rance: That would be more a short-term answer as opposed to long
term. The area of concern at this time is the communications side of the
business. That's not just us, we're not immune to it. Many companies are
having problems in the communications market because of the cutbacks in
capital expenditure. But we see the problem as short-term. Longer term,
we feel there is no alternative. Communications will grow starting, I
believe, starting within six to nine months.

TWST: Are you pretty confident in the moves that the current management
team has made to navigate through this softer market and that will also
bring the company to full throttle when it comes out?

Mr. Rance: The answer is yes. When I joined SBS ' I joined SBS in March
this year ' I was impressed with not only the management team of SBS at
the time, but also the employees of SBS. I'm a believer that you win if
you've got the right attitude and you have good teamwork. That certainly
is what we have here at SBS. I have complemented the management team by
bringing in a couple of people who have considerable expertise in sales,
business development and marketing. I feel now that we have the right
executive team to execute. We have the plans, and that's exactly what
we're doing, we are executing against our plans.

TWST: As CEO, where do you find yourself spending most of your time
right now?

Mr. Rance: I'm spending a lot of my time working externally to the
company because the plans are in place. I have the right executive team,
who are responsible for executing the plans. My time is spent working
with our investors, our customers, with analysts who follow SBS, and
ones who do not follow SBS to convey the message of where we're taking
the company over the next two years.

TWST: Have you tried to develop a specific corporate culture since
you've been there?

Mr. Rance: Yes, it's a corporate culture of empowering the people to
make the decisions and move the business forward, and also to be results
driven.

TWST: Would you suggest that a long-term investor sitting down with your
financial report focus on the most?

Mr. Rance: I would focus on the results of the company. If the company
gives guidance, measuring the company in executing and delivering the
results against that guidance. As a long-term investor, I would
certainly take a look at the vision: the vision of the CEO, the vision
of the company. I would take a look at the technology that that company
has: does it have a very broad, diverse product portfolio? Does it have
a very broad, diverse customer base? Because if we were only in the
communications market, SBS would not be in the same position we are in
today. The fact that we're in commercial and government markets as well
certainly helps SBS to ride through the storm. So as an investor, I
would certainly be looking at the vision of the company, the long-term
strategic direction of the company, and whether they are executing and
delivering against their plan, specifically on the financial results.

TWST: What would you identify as some of the prime factors that are
either helping or hurting your operating margin right now?

Mr. Rance: In terms of operating margins, we've just announced our year-
end, and our operating margin is very good ' we delivered excellent
results. What we see in the next six months is a communications business
that is certainly suffering at the moment due to capital expenditure
being cut off.

TWST: How do you feel about your stock valuation at present? Is it fair
in relation to some of the other players in your space?

Mr. Rance: No, I don't think it's fair, I'd like to see the stock a lot
higher. I believe it will go higher as we deliver the results going
forward. So my objective is to deliver the results and I believe then
the stock will take care of itself. But, no, it's not as high as I'd
like to see it.

TWST: Do you think that there's something that potential investors
either misunderstand or don't quite know about SBS that you would want
to clarify?

Mr. Rance: One of the important things I observed as I started to go
around SBS to understand each of the businesses as well as talking to
our customers and talking to our investors, I found it was very
difficult to clearly understand the breadth of the portfolio of SBS and
the customer base. And communicating that to our investors, and
communicating to the analysts, they now understand that SBS has a
diverse product line, a very broad product line, and we have a very
diverse customer base that is a great strength for any company in
today's market situation. If we have a downturn in one of our
businesses, then our other businesses are pulling us forward. So it's a
good thing to be diverse rather than be focused on one particular area.
I see my job, certainly over the next six months, to be out talking to
more and more of the potential investors who could invest in SBS to
ensure that they understand what the company is about. And for them to
understand what our vision is, and also why they should be invested in a
company like SBS. So over the next six months my focus is going to be on
those investors who currently are not invested in SBS.

TWST: Then aside from being a good price, what other two or three
reasons would you give a long-term investor to buy today?

Mr. Rance: An excellent management team running the company, a very good
vision, and a very good plan that is being executed.

TWST: Thank you.  (AAM)

GRAHAME RANCE
 President & CEO
 SBS Technologies, Inc.
 5791 Van Allen Way
 Carlsbad, CA 92008
 (760) 438-6900
 (760) 438-6904 - FAX
 www.sbs.com
 e-mail: info@sbs.com

Each Executive who is the featured subject of a TWST Interview is
offered the opportunity to include an Investors Brief or other highlight
material to be provided and sponsored by and for the company. This
Interview with Grahame Rance, President & CEO of SBS Technologies, Inc.
is accompanied by an Investors Brief containing corporate information.

Copyright 2001 The Wall Street Transcript Corporation
All Rights Reserved


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