Cardkey Management Shifts Again
For the second time in less than two years, Cardkey Systems has reshuffled its top management.
The move appears to reflect the continuing turmoil and financial difficulties at the Chatsworth-based electronic security systems company, industry experts said.
Cardkey is the largest maker of access systems that use magnetically encoded cards and electronic readers--instead of traditional locks and keys--to lock and unlock doors. It mainly serves defense facilities, financial institutions and other operations that need high-tech security.
Malcolm S. Stopps, the company’s top executive since December, 1984, and its president since January, quit Friday. He could not be reached for comment.
But R. Keith McGuire, president and chief executive of Cardkey’s parent, EyeDentify Inc. of Beaverton, Ore., said he and Stopps, 41, had “conflicting management styles.”
“I consider myself a strong leader, and so is he, and that created certain problems,” McGuire said. “He’s a very good CEO and I don’t expect to change what he’s been doing. Our differences were personal.”
McGuire, 39, was named acting president. He said he did not know when the company would choose a permanent replacement.
As part of the management reshuffling, F. Joseph Maskrey, 41, who had been Cardkey’s vice president for sales and marketing, was promoted to executive vice president and has taken over responsibility for daily operations, McGuire said.
EyeDentify, which makes security devices that identify people by examining the patterns of their retinas, bought Cardkey from Fairchild Industries of Chantilly, Va., an aerospace, electronics and industrial parts firm, in August. McGuire joined EyeDentify in 1984, after serving as vice president for legal affairs at Pacific Telecom, a Vancouver, Wash. telecommunications firm that holds a majority interest in EyeDentify.
Stopps had replaced John J. Theiss as Cardkey’s top executive nearly two years ago. Before joining Cardkey, Stopps worked for Wordplex, a Westlake Village maker of office automation equipment that he helped found.
Cardkey had sales last year of $35 million, up from $8 million in 1979, and its market share is 20% domestically and 17% worldwide. Nevertheless, the company had been losing money for several years until it returned to profitability late this summer.
“They have a reputation for being a chronic money loser,” said Joseph Freeman of Newtown, Conn.-based J.P. Freeman & Co., a consulting firm.
Freeman said that the acquisition of Cardkey by EyeDentify, a tiny company with sales of just $2 million last year, may worry some customers and prompt them to go elsewhere. Freeman predicted that, as a result, Cardkey will fall behind its chief competitor, Schlage Electronics of Santa Clara, Calif., sometime next year.
Stuart B. Knott, president of Schlage Electronics, said he was approached by Fairchild when it was trying to divest Cardkey, and was not interested in buying it.
“They tend to do too much customizing to make everybody happy and it’s very expensive,” Knott said. “It chews up their profits.”
Freeman also said there are tough newcomers in the business. Last month, for example, Computer Applications Systems of Boca Raton, Fla., won a $40-million contract to provide card-based security systems for 2,000 IBM locations.
A principal advantage of systems like Cardkey’s is that the cards can be coded in ways so that access is regulated without forcing people to carry fistfuls of keys. A janitor, for instance, might get a card enabling him to enter a closet, but not a vault, and a computer programmer might get access to a mainframe computer room, but not the executive suite.
The systems also can be used to log employees’ use of various facilities, keep track of billing for parking garage customers or help security guards track down intruders.
With such access systems, people insert their card into a reader that processes the card’s magnetic code and then unlatches a door. More sophisticated systems also require users to enter a code, like the personal identification number for automated banking machines.
McGuire conceded that Cardkey has had its problems.
“We have a pretty negative service reputation that the company has been trying to shake for three years,” he said. “We’re trying to improve that and get the word out with better marketing.”
McGuire said the promotion of Maskrey, the company’s marketing chief, signals the company’s new emphasis on marketing. EyeDentify plans to continue packaging its products with Cardkey’s for customers requiring top security.
The top systems cost as much as $11,000 per door. The average Cardkey system for an entire building, however, sells for around $100,000. The simplest systems, in which any card can open any door, cost less than $10,000.
Cardkey estimates that about 20% of its business is for new construction projects and increasing that figure is a major objective. Companies are often reluctant to replace existing equipment, and Cardkey charges as much as $3 million to outfit new buildings.
The company completed a deal last month worth at least $13 million in which it will supply ADT Inc., a New York-based security alarm company, with cards, readers and monitoring equipment to be used with access and alarm systems.
Cardkey claims to have made the original card-based entry systems in 1948. It offered little advantage over regular keys except for a certain cachet.
But that was just fine with customers, mostly private clubs that kept their bars open on Sunday in places where it wasn’t legal to do so.
Cardkey employs 440 in the United States and Europe. About 200 are based at the company’s headquarters and manufacturing facilities in Chatsworth.
