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  1. Technology
June 1, 1994

BACK ON AN EVEN KEEL AT LAST, TEKTRONIX OUTLINES PLANS FOR RAPID GROWTH IN EUROPE

By CBR Staff Writer

Tektronix Inc has recently appointed Rudi Lamprecht as president of European operations to head up its new push to expand its European business to 35% of total revenue from its present 25% of revenue, a figure that currently amounts to $321m. It has also opened up a new European headquarters in Munich which will drive the new business plan. Following the sale of a number of its businesses over the past few years, the company is now focussing on three main areas. Test and measurent products is the largest segment and represents 50% of total worldwide sales.

Vaguely

Computer graphics products contribute close to 30% of world sales and video systems represent 20%. The split within the 25% European share of the market is roughly in proportion to the worldwide figures. The company was less keen to be specific about the exact period over which it plans to achieve the 40% or so increase in the European sales that would take it to 35% of the total – assuming sales in the rest of the world remain on their current growth tack. Lamprecht commented rather vaguely that they want the overall company to grow and that it doesn’t matter if it’s next year or the year after, but subsequently acknowledged that 1998 would be a good challenge for the target. It was also ambivalent when it came to discussing which of the three market areas was likely to contribute to the European growth and whether it expected a shift in the spread of each of the areas, saying that it was not concerned about shifts in the business distribution. It accepts that the test and measurement segment is bottoming out but believes it has reached the lowest point to which it will fall and agreed that computer graphics would be its fastest growing market, followed by video systems. To achieve the 40% European growth goal the company is focussing its activities into four European marketing centres to tailor its products specifically to the local European market. The new Munich centre will co-ordinate the overall product mix, the centre in Paris will be responsible for the printer and X Window terminal side and the two centres in Marlow, Buckinghamshire will be involved in all three market segments. It is establishing a European marketing team to identify new markets and is shifting the focus of its management team towards growth as well as broadening general awareness of the company’s activities beyond the general awareness that it makes oscilloscopes. It is energetically recruiting sales staff for the commercial push and also retraining existing staff. A key factor in the new European focus is developing more strategic alliances with leaders in various relevant market segments. In February Tektronix expanded its six-month-old strategic alliance with Munich-based instruments manufacturer Rohde & Schwarz GmbH & Co (CI No 2,354).

By Abigail Waraker

Tektronix is now exclusively responsible for marketing, distribution and support for Rohde & Schwarz’s test and measurement equipment and radio frequency and microwave communication equipment in Canada as well as in the US. As far as the three business segments go, in computer graphics, Tektronix estimates that the potential market for X terminals is $700m and that there is a potential for a growth of 20% to 30% per annum in unit numbers. The firm also recognises a faster trend within Europe towards open systems than elsewhere so it will be targeting its X terminals at the European open systems market. It is focussing on computer equipment manufacturers such as Compagnie des Machines Bull SA, ICL Plc, Ing C Olivetti & Co SpA and Siemens Nixdorf Informationssysteme AG with the aim of having them use Tektronix X terminals in their client-server offerings and has set up a dedicated sales force to work on this. Last month the firm signed with Siemens Nixdorf, which is reselling Tektronix X terminals as part of its portfolio. Tektronix uses MIPS R3000 RISC processors from LSI Logic Corp, which integrates the graphics onto the same chip for Tektronix. The company is not yet planning to migrate to the 64-bit R4000 chip until

the price reaches a more accessible level than the current $3,000 tag, because the firm’s customers are not demanding the extra technology at such a high price as yet. There is demand for X terminals from banks and finance houses for transaction processing and point-of-sale services but a limited number of European companies in this field are using Tektronix X terminals. These include France’s Sofitec Bank and Societe Generale stock brokers who are using the terminals in their trading areas. The company also faces the challenge that in Europe firms tend more often to purchase computer equipment from a single vendor than in the US. Tektronix’s Network Displays Division is working in the area of open desktop information access and now offers networked digital video in an X Window via a software upgrade and audio board. In the colour printer market Lamprecht said that the aim is for Tektronix to be the default choice in colour printing. Chairman and chief executive Jerry Meyer estimates the worldwide printing market to be worth $20,000m, 10% of this from colour printers, but by the year 2,000 it is forecast that 90% of this will come from colour printers. The European printer market is currently estimated at $6,000m. To target this market the firm plans to increase the number of dealers by at least 200. The company makes three types of colour printer using thermal transfer, solid ink jet and dye sublimation colour printing technologies; the low end thermal product costing from #3,000.

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As well as acknowledging the importance of the European market, much of the planned transformation in Europe stems from Tektronix’s perceived need to re-focus the company’s activities as a whole. It intends to pursue business alliances further to fill product portfolios or to add value and is also actively interested in acquisitions of companies that complement the three main business areas. As a result of these changes Tektronix hopes to offer a 15% to 20% return on equity in the future, up from the most recently quoted figure of a 12% return. It has been working to straighten out its cash position and has restructured its debts using the low interest rates on offer to provide more flexibility. At year end May 31 1993 the firm saw a net loss of $55m on turnover of $1,302m, but has had three profitable quarters during the current financial year. The firm would not comment on its May 31 year-end results which will be announced around June 22, but said it is aiming to achieve a 10% per annum growth rate from now on.

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