For Subscribers

Get the complete article now!

TWST: What role will mergers and acquisitions play as you look to fill out that growth strategy you described?

Mr. Holland: At this point, we (Nasdaq:FRGO) do not see mergers or acquisitions playing a role. We have invested heavily over the past two or three years in developing new, patented technologies, and our product line currently reflects these investments. We are the only manufacturer of desktop systems, with a full line of products. Our product line runs the gamut from low-cost, entry-level systems to very sophisticated high-end systems which can personalize smart cards and proximity cards. None of our competitors have this breadth of product or depth of engineering expertise. We believe the market we are now serving has enough growth to keep us very busy. We have the leading market position, the best distribution system and a product range serving the needs of practically every customer. I do not, therefore, see a need to try to accelerate our growth by acquisitions. We have all we can handle right now. Also, with our strong and growing market position, there are not a lot of attractive M & A candidates out there.

TWST: Give us an assessment of your management team at this point.

Mr. Holland: I was blessed with FARGO having been in business for 20 years, and thus having a lot of talent. We were helped by our Founder, who has served as a consultant with the company. We have been able to attract a very, very strong engineering team over the past couple of years. We have by far the best and most experienced team in our industry. Our CFO left active management three months ago, but he is now on our Board and continues as an advisor to the company. Other than that change, we’ve had a very stable management situation, especially for this industry. Minnesota has, I think, the lowest unemployment rate in the country. We are fighting a recruiting problem, but we have, thusfar, been able to attract very talented people.

TWST: At this point, how could the investment community better understand FARGO?

Mr. Holland: We don’t have a lot of misperceptions. Our product is highly technical, but it’s very simple to understand. We personalize cards. Most people are able to understand that easily because they carry our product in their pocket. The average American carries an average of seven personalized cards. As those cards grow in the wallet, or more importantly, as those cards have higher value due to increased electronic content, the personalization of these cards and electronics will become increasingly important. We are going to see, over the next few years, a rapid transition to two advanced card technologies. The first is proximity cards. To get into a typical building, many people now carry a proximity card that has a radio-frequency wire in it. This is an antenna that interacts with the building’s access control system. These are often very hard to print on, given their embedded wires and uneven surfaces, but we have a new product, our High Definition Printer, that will personalize these cards. The second advancement of technology is the smart card. Here a microprocessor is placed into the card. This miniature computer can store value, make computations and interface with other computer and communication systems. With technologies such as public key infrastructure (PKI) and digital signatures, these cards will offer strong security for access into facilities and communication systems.