For immediate release October 20, 1994
* APC and IBM sign procurement agreement to bundle pre-loaded APC software and cable with IBM PC servers
* APC management comments on HP UPS entry
American Power Conversion Corporation today announced record sales and earnings for the third quarter ended September 30, 1994.
Sales for the third quarter of 1994 were $103.8 million, up 48.1 percent from $70.1 million for the third quarter of 1993. Earnings for the third quarter of 1994 were $19.2 million ($.21 per share) up 42.0% from $13.5 million ($.15 per share), in the third quarter of 1993.
For the nine months ended September 30, 1994, sales were $264.8 million, up 51.1 percent from $175.2 million for the same time period in 1993. Earnings for the nine months ended September 30, 1994 were 48.3 million ($.52 per share), up 50.0% from 32.2 million ($.35 per share) in the same time period in 1993.
Rodger Dowdell Jr., President and Chief Executive Officer, credited the quarterly results to continued strong demand across the companies core product lines.
Dowdell said APC has taken advantage of its growing success in large corporate accounts by extending relationships with several major high tech manufacturers including IBM, Apple, Microsoft, Novell and HP.
"These relationships are symbiotic," said Dowdell. "APC offers a reliable solution to our partners which makes their own solutions more reliable. Both parties, and most importantly, the customers benefit."
For example, as part of a new IBM agreement, APC will support its PowerChute plus UPS management software for IBM's NetFinity hardware management application packages. NetFinity supports workstations functioning as Windows managers and OS/2 clients and servers, Windows clients and NetWare servers.
Under the agreement, certain new IBM PC Server 500 and selected models of the IBM Server 95 will be supplied with PowerChute plus for NetFinity, Novell NetWare, and OS/2 and a serial cable to connect the UPS to the server. In addition the software will be pre-loaded on IBM's new ServerGuide 2.0 CD-ROM offering providing easier installation for the customer. IBM will also resell APC-labeled UPSes.
"In addition, our partnership with Microsoft continues to bring in new accounts as Windows NT grows its market," said Dowdell. "During the quarter Microsoft invited APC to protect and demonstrate UPS integration at Microsoft's unveiling to the press of their latest version of Windows NT."
Apple Computer has also selected APC for co-development work on the PowerPC platform, while Novell and APC have extended their alignment through APC sponsorship of the Network Professional Association.
"This week Hewlett Packard certified APC as a HP OpenView Premier Solution Partner. APC is the only UPS company certified to this stringent level, and this endorsement is consistent with our strategy of supporting industry-leading network and system management applications," said Dowdell.
"We are very pleased to see industry leaders such as American Power Conversion becoming HP OpenView Premier Solution Partners," said Robert Hoog, General Manager, Network & Systems Management Division, at Hewlett-Packard. He also added: "APC has worked with HP to provide customers with the peace of mind that comes from HP OpenView Certified Applications. The remote power management and diagnostics provided by APC's integrated PowerNet Manager is a valuable tool for an administrator using HP OpenView."
The quarter also marked the launching of a widespread new promotional campaign designed to increase awareness in the Small Office, Home Office (SOHO) market.
"The SOHO market represents a large untapped buying group," commented Dowdell, "While a recent study showed the number of home PC users who plan to buy UPSes in the near future has tripled, overall penetration is only about 5%."
APC's products are available to this market through the retail, mass merchant and mail order channels. Dowdell said a sales effort dedicated to these channels has enhanced growth and signed several new accounts during the quarter.
At the same time, penetration into international accounts grew with the signing of several new distributors in Germany, Australia, and the Middle East.
"Eastern European countries continue to provide opportunities for APC products," noted Dowdell. During the quarter the company received orders from a major PC assembler in Poland as well as a large order from the banking industry in Russia to protect network file servers.
Product shipments from the company's manufacturing facility in Galway, Ireland commenced during the third quarter as well. "Both the Back-UPS and Smart-UPS product lines are now shipping to European locations from this facility," commented Dowdell. "We presently employ over 200 people in Ireland and have been very pleased with the progress to date."
The company's expansion efforts within the US have begun with the ground breaking for a 30,000 square foot addition to the West Kingston, RI facility. "As we continue to grow, an additional 170,000 square foot addition is planned to supplement the initial expansion underway," added Dowdell. "Manufacturing efforts are also in the works for APC's facility in Fort Meyers, Florida. This plant is strategically located to better address the South East US markets as well as the Latin American markets and to further expand APC's geographic manufacturing presence."
The company also received several new awards including being named a "Preferred Component Supplier: Power Sources" by Electronic Buyers News during the quarter as well as receiving an "SCO OK Tested and Supported" award for compatibility of hardware products with SCO system software.
"In short, our distribution, name recognition, and manufacturing volumes put us in the best position to benefit from the explosive growth in the SOHO market," said Dowdell. "At the same time, industry leaders have endorsed APC as the best choice for high-end network protection, a position we have continued to extend with new alignments and new software offerings."
In other developments, Dowdell commented on HP's recent introduction of specialty UPS products.
"While it is dangerous to take any competitor for granted, it is important that HP's new products be put in perspective," said Dowdell.
"The products from HP do not introduce any new technology or features to the enduser, while being offered at pricing significantly higher than APC's comparative product," said Dowdell.
"Furthermore, APC has built its success on a philosophy of obsoleting our own product so that by the time a competitor can match our feature set, we typically have introduced the next generation of the original product," said Dowdell, noting that in the next few weeks APC will be introducing products which will "dramatically raise the bar in the competitive landscape."
"In sum, the market is broad, deep and fertile enough for HP to sell product successfully," said Dowdell. "Their entry will undoubtedly broaden the market to the whole industry's advantage, and if significant market share gains are to be made by HP, we believe they will not be made at APC's expense."
"This is a very exciting time at APC," said Dowdell.
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American Power Conversion (NASDAQ:APCC) is the market share leader in Uninterruptible Power Supplies (UPS) and software for networks and similar mission-critical applications. Product lines include the Back-UPS, Smart-UPS, Matrix-UPS, Line-R power conditioners, PowerChute software, PowerNet SNMP adapters and software, SurgeArrest surge suppressors and PowerManager Power Center.