By Siobhan Kennedy
Racal Datacoms, the loss-making unit of Racal Electronics, spun off last year (CI No 3,561), re-emerged yesterday with a new name and a business strategy to boost revenues through increased services offerings. The new company, Milgo Solutions, says services currently accounts of 50% of its revenues but the plan is to increase that percentage to 60% or more by the end of the year. Predicted 1999 revenues for the UK operation are 32m pounds, of which just over half will come from network services. According to UK divisional marketing manager, Howard Inns, Milgo will achieve its goals by focusing on providing complete network solutions, with emphasis on pre-sales consultancy and a larger choice of services options. We offered consultancy in the past, now we’re expanding that to offer project management, training and so on, he said. As part of the push, he said, Milgo will sell full remote network management services and on-site support and hopes to provide total outsourced contracts some time this year. At the one extreme there are companies that want a complete outsourced solution, while at the other there are organizations who have their own staff and just want the hardware, he said, our market place is somewhere in between but we’re moving towards the outsourced end. Inns claims that the company didn’t lose any customers in the transition to Milgo. As well as the 100 ongoing services contracts it carries forward, the company has also signed 10 new contracts with existing companies and a number of brand new ones including a 3.5m pound deal to develop a network infrastructure for Scotland’s three international airports.
Growth strategy
Aside from services, the growth strategy will see the company focus its efforts on providing network infrastructures to support applications such as e-commerce as well as assisting companies that are integrating voice and data on the same IP-based network. Although the name was only announced this week, the actual company, Milgo Solutions, was formed last September, when Platinum Equity Holdings, of Los Angeles, California, purchased Racal Electronics’ loss-making datacoms arm for $47m. The group consisted of three units: a security products business, a network systems arm and a products division. Under terms of the deal, the security unit remained part of Racal Electronics and the two other divisions were amalgamated into Milgo Solutions. The company is incorporated in the US, as Milgo Solutions Inc, and all product manufacturing is US-based. But with the likes of networking giants Cisco Systems Inc and Nortel’s Bay Networks in the background, the future of the products division appears to remain in the air. Although Inns said the UK arm still sells old Racal-Datacom products (principally its fiber optic cabling infrastructure, modems, multiplexers and ISDN terminal adapters) he did concede that problems with the product division were what largely contributed to the group’s overall demise. Now both UK and US operations extensively source hardware from Cisco and Nortel, he said. An announcement about the future of the division, and how product development will proceed, if at all, is expected some time this year. Under the restructuring, 30 staff were axed from the UK operation, leaving a total of 220. Some 800 employees work for the US arm.
