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GTI—Connecting Through Smart
Management Teams
California Business
By Bill Manson
The word connectivity has been Gary Luick’s ticket
to a success even he didn’t dream of four years
ago. GTI manufactures widgets that make it possible
for corporations’ different computers — and
people and departments — to talk to each other.
“So the right hand,” says Luick, “knows
what the left hand is doing. That’s what it’s
all about. It decreases turf fights and increases productivity
amazingly.”
The widgets are components for local area network (LAN)
hardware, one of the fastest-growing areas of electronics.
These days you’re hard put to find a LAN original
equipment manufacturer (OEMs), such as Novell or SynOptics,
that doesn’t use GTI components — just four
years after Luick started chasing the business.
Since Luick took charge, annual revenues have surged
from $41 million to $103 million. GTI is now growing
at 30% a year, and just plain dominates LAN component
sales to OEMs, with more than 3,000 customers worldwide.
Four years ago, Luick was happily acquiring and divesting
companies for the giant Allied Signal Corp. when he
got the proverbial phone call.
“GTI, mid-’89, was a company of modest technical
products, reasonable profit, and no growth,” he
says. “They made printed circuit boards,, semi-conductors,
that sort of thing. Nothing cutting edge. Their board
was worried about getting sucked into the recession.
They wanted someone to promote modest growth for the
company.”
GTI probably hired Luick because of his experience in
mergers, takeovers, and divestitures. They realized
they needed an acquisition to broaden their revenue
base.
Luick accepted their offer and quickly set out to learn
the business. By Christmas, he wanted in on the high-growth
communications industry.
But first Luick swept out a status quo-oriented management
team. “I needed people to handle growth,”
he says. “I had to shake things up. I’ve changed
all the people, merged two divisions, surrounded myself
with people who just naturally are always looking for
new opportunities.”
But the most important judgment call Luick made was
to spot — and woo — a small but dynamic maker
of LAN networking components, Valor Electronics. “I
went after them because they had the broadest product
base, the broadest customer base, the best product,
and the best product profit margins But above all, they
had an energetic and intelligent management team with
an eye on the future — and a dream they didn’t
want spoiled by any money-hungry acquirer.”
It took him almost a year to persuade them that he wasn’t
going to ruin their dreams.
“Most takeovers don’t work. You shouldn’t
acquire a company if you’re not confident in its
management team. I didn’t change them. I made sure
they knew I admired them. I have kept hands off —
no micro management.”
His approach has worked — brilliantly. Valor’s
business now provides GTI with 70% of its total corporate
sales.
Luick was right on target with his timing, too. In 1992,
the LAN idea took off as corporations realized the benefits
of linking up their PCs and peripherals into efficient
communications systems. And there are many burgeoning
markets to be tapped.
No surprise then that GTI, dominating the supply side
to OEMs, has enjoyed a significant increase in earnings
and sales for at least 10 consecutive quarters, with
net income increases of at least 100% for each quarter
of 1992.
Which goes to show what a little connectivity can do
for a company’s bottom line.
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