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TWST: We'd like to begin with a brief historical sketch of the company
and a picture of the things you are doing right now?
Mr. Lamonde: EXFO was created 20 years ago in my apartment with a very
humble start: two young engineers, a $100 investment, very simple math.
We grew, in fact, 60% on average for the first 16 years of the company.
We returned a profit every year and put it back into the operations. We
built the company all the way to going public in June 2000 and never had
any VC funding. It makes this company a bit unique in the sense that it
has very strong ownership and management. This allowed us to be one of
the last companies to be impacted by the telecom meltdown in 2001 and be
one of the first companies to resurrect. We've had a good sequence of 10
consecutive quarters of sales growth and five consecutive quarters of
profitability on a GAAP basis. What we do is provide test equipment to
all the network operators on a global basis, the Verizons of the world,
the AT&Ts, the France Telecoms, the Deutsche Telekoms, all those
operators running telecommunication networks. TWST: I understand that one of your strong competitive strengths is your
intellectual property base.
Mr. Lamonde: Absolutely. We invest quite substantially in R&D year-in
and year-out with net R&D typically in the 12%-14% range. These
investments provide us with a very strong R&D program, specializing in
testing the optical fiber, the protocols or traffic running through the
fiber, and the copper access, which is where we test the twisted pair to
ensure it can provide added bandwidth and deliver IPTV and voice over IP
(VoIP) kind of services. But we don't become enamored with our
technology; EXFO is first and foremost a market-driven company. We
attempt to identify the key market trends out there, then steer our R&D,
sales and marketing programs toward these areas to meet customer
requirements. One critical metric that we measure on a continual basis
is the percentage of revenue that is derived from products on the market
less than two years. We have historically been around 40%, which is
excellent for a technology company.
Tickers included in this excerpt: EXFO
For more information call (212) 952 7433. The
Wall Street Transcript does not endorse any of the comments made by interviewees, and does
not make stock recommendations.
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