Richardson started 'in the trailing edge'
September 5, 2005
BY MICHAEL KRAUSS
This Labor Day, Ed
Richardson, the 63-year-old CEO of LaFox, Ill.-based Richardson
Electronics deserves a well-earned rest. Instead, he'll be chaperoning
a two-day campout for Boy Scouts at his wildlife foundation. It's
typical of Richardson, who is an industrious, successful and unlikely
up in far west suburban Wayne, Richardson set out to be a veterinarian.
While studying at Iowa State, he came down with mononucleosis
and went home to recuperate. His father, Arthur urged him to drop
out of school and join the family electronics distributorship.
That was back in 1961.
"We started in
the trailing edge of technology," says Richardson, whose
father launched the company as an RCA vacuum tube distributor
in 1947. While others fled aging vacuum tube technology, Arthur
saw riches. He doubted vacuum tube technology would vanish altogether.
He was right, though
he didn't live to see his vision realized.
million-plus in sales
When he died in 1979,
the company was $12 million in revenues. "When we got into
vacuum tubes, people said we were crazy," Ed Richardson said.
Today, sales exceed half a billion dollars.
Richardson's vision led to a Department of Justice antitrust suit
in 1989. "They felt we had too large a share," his son
Out of necessity, Ed
Richardson diversified. Today, he makes power tubes that keep
television stations on the air. He creates custom display terminals
for New York Stock Exchange traders. He manufactures signal amplifiers
for cell phones. If you drive a Mercedes, a Richardson amplifier
boosts your cell-phone signal to avoid dropped calls. Richardson
recently launched a retail version of the signal amplifier he
hopes to sell through Radio Shack and Best Buy.
To build those engineered
solutions, Richardson employs 250 electrical engineers among his
1,200 employees with offices in 70 countries. "I sort of
laugh," the college drop-out says. "The prerequisite
to come to work here today is an MBA or an engineering degree."
returned from an 11-day swing through China, Japan, Taiwan and
Korea. Sales in China have grown 65 percent annually for the past
five years. On Aug. 26, Richardson announced record sales of $578.7
million for the year ended May 28, up 11 percent from 2004. The
stock of the publicly held company (RELL) closed Friday at $7.68,
unchanged. It has traded between $11.76 and $6.55 in the last
Yet, it's been a frustrating
year for Richardson. He's in the midst of a restructuring brought
about by Sarbanes Oxley compliance and the fallout from Enron.
Despite booming product
demand, Richardson delivered a loss of $11.3 million for the year
after reporting net income of $6 million last year. "Although
it looks like a huge loss, it has no cash impact," he says.
Richardson had $13.1
million in deferred tax assets reversed off his books. "Our
auditor questioned our ability to use those losses going forward
based on current company performance," Richardson says. "That
combined with $2.4 million worth of expense to comply with Sarbanes
Oxley and another $1 million in fees to accounting companies for
the restatement are the major reasons for the loss."
Richardson isn't the
only mid-size company lamenting the costs of regulatory compliance.
The American Electronics Association has been beating the drum
on this issue for months.
Richardson is enthusiastic
about the business, but he adds, "I don't think the government
really understands the handicap in costs they've put on small
That's something worth
considering around the campfire this Labor Day weekend.
More evidence of a
Chicago School of Entrepreneurship. Northwestern University professor
Steven Rogers reports that the University of Illinois at Chicago,
DePaul University and Northwestern are burgeoning bastions of
entrepreneurship. All three were named to the top 20 list of entrepreneurship
programs by Entrepreneur magazine. Leaders of NanoInk, Nanosphere
and Performics emerged from Northwestern.
Motorola and Apple Computer
to unveil the long-anticipated iTunes mobile phone Wednesday.
... Marcy Dockery joins Burson-Marsteller as
director of its U.S. Technology Practice based here. Dockery is
a Silicon Valley veteran who worked with Apple, Google, Plaxo
and WebTV Networks.
Krauss is a Chicago area tech writer and consultant.