A dark cloud hangs over Del Global Technologies, and Walter Schneider is expected to clear the air.Reeling from financial trouble, Del fired the president and chief financial officer of its Medical Systems Group at the end of January, then elevated
A dark cloud hangs over Del Global Technologies, and Walter Schneider is expected to clear the air.
Reeling from financial trouble, Del fired the president and chief financial officer of its Medical Systems Group at the end of January, then elevated Schneider to the post of president. In the week since his appointment, Schneider has been Del's point man.
"We will get through this," he said. "Our business is extremely strong."
The trouble became apparent in early November when the company announced a pending downward revision of its quarterly and fiscal 2000 results. In lieu of this restatement, the company delayed filing its form 10-K with the Securities and Exchange Commission (SCAN 11/22/00). The delay set in motion a series of events: Nasdaq delisted the company's stock and Del dismissed then-president David Engel and CFO Michael Taber.
Both were veterans of the company. Engel served as Del CFO from January 1995 to August 1998, then ascended to the presidency and held it until February 2001. Taber served as CFO from January 1993 to December 1995 and again from September 1998 to February 2001. Schneider refused to comment on who actually fired the two executives or how the decision was made, stating only that the action was taken two days after a meeting of the board of directors.
The company is now gathering information to complete the necessary SEC filings, a process that should be complete within four to six weeks, according to Schneider. In the meantime, Schneider hopes to reassure Del's customer base and shareholders that the company is financially strong and fit to continue.
"The sooner we get (the investigation) behind us, the sooner this cloud will be gone and we can get on to doing good business in an excellent industry," he said.
Schneider is a relative newcomer to Del, having joined the company in September as senior vice president of operations for Del Medical Imaging. But he may have exactly the kind of knowledge Del needs to get out of its current fix. Prior to joining Del, Schneider was president of Trex Medical's Bennett, Continental, and XRE subsidiaries. He also served as general manager of Bennett X-Ray prior to that company's acquisition by Trex Medical and as president of Raytheon Medical Systems.
"I think the key to success is understanding the total business," he said. "We rely on distribution through an independent dealer network, and I have 40 some years working with dealers in general-purpose radiography businesses."
Schneider hopes to reinvigorate the company by emphasizing dealer contacts, while implementing a national sales strategy. The work that needs to be done may not be as challenging as it seems. Del posted record bookings in January and has the biggest sales backlog in its history, according to Schneider.
Film-based x-ray systems and components will be the focus of near-term efforts, he said. Through its subsidiaries, including Universal, Gendex-Del, DynaRad, and Bertan High Voltage, Del manufactures a wide range of radiography and mammography systems and subsystems. The company has focused on providing low-cost radiography products sold primarily to clinics and small hospitals. Its product line expanded in mid-2000 after the FDA cleared the sale of x-ray equipment made by Italy-based Villa Sistemi Medicali, in which Del holds a controlling interest (SCAN 6/21/00).
The decision by Marconi Medical Systems to exit the x-ray business has opened a new opportunity for Del, according to Schneider. Previously, Del had supplied Marconi's RadView radiography product line. Now that system is available through Del's dealer network.
"We are using it to address a higher end of the market than we have been able to in the past, and our dealers are doing a wonderful job with this hospital-grade product in their portfolio," Schneider said.
Del Medical is also working on a digital radiography system. The company will wait three to five years before releasing such a product to give the technology time to come down in price. Schneider explained that the average radiographic system in a clinic or orthopedic configuration today sells for around $60,000. Replacing the buckys in the table and the upright with digital receptors increases the price to $300,000.