THE TIMES 100 : THE BEST PERFORMING COMPANIES IN CALIFORNIA : THE BOTTOM LINE : Brajdas: An Early Riser : ‘Mundane Products’ Deliver for Firm Making Its Debut
Brajdas Corp., which zoomed into the ranks of The Times 100 at the No. 4 spot, admittedly but unintentionally has a low profile. Despite commendable results, a company official says, Brajdas has failed to make some lists of top California companies simply because publications literally haven’t heard of it.
“We distribute mundane products,” said Allan Klein, vice president, chief financial officer and chief operating officer of the distributor of electronic components, with offices in Warner Center in Woodland Hills. “Unless you are a monster company with hundreds of millions of dollars in sales, distribution does not get a lot of notice.”
By those standards, Brajdas (pronounced Braddas), with $61.4 million in 1988 sales, is well shy of the monster status of industry leader Avnet Inc., which had about $1.8 billion in 1988 sales. But Brajdas’ average return on equity during the past two years has been a monstrously good 48%. (Last year, the company did not meet The Times 100 list’s sales criterion.)
Brajdas, actually a holding company for several distributors, sells connectors, sockets, switches and semiconductors to 10,000 small and medium-sized manufacturers of computer, aerospace and medical equipment in eight Western states.
Its biggest customer is Sun Microsystems, which has maintained a loyal tie because Brajdas was the only distributor that would sell to Sun when it was a garage start-up. Klein considers Brajdas’ strength to be “small orders delivered promptly.”
Brajdas’ results belie the company’s modest beginnings. It sprang to life from a Monrovia company, Micro-Z, which filed for Chapter 11 bankruptcy protection in 1983 after sales of its computerized reservations systems dried up.
Beverly Hills venture capitalist Jack Salzberg helped the company through bankruptcy proceedings with a $500,000 loan. He bought two electronics components distributors and renamed the company Brajdas, combining the initials of his children and grandchildren. The company’s chief division is Cypress Electronics, which has major branches in Buena Park and Santa Clara.
Last August, Salzberg, who served as chairman, president and chief executive, severed his ties with the company, surrendering his titles and selling his shares, for a tidy $2-million profit, to partner Donald Zimmerman.
Zimmerman is president of Barclay & Co., a rich San Francisco investment firm that owns 58% of Brajdas. Beyond that, about 25% of Brajdas is in the hands of “a very few people,” Klein said. The remaining 400,000 or so shares are held by about 3,000 investors, many of them unsecured creditors of Micro-Z who were paid off in stock.
Challenges lie ahead, however. Segments of the electronics industry are experiencing a slowdown in growth. The slump in semiconductors eroded margins and contributed to a recent steep earnings drop, although Klein maintains now that “we think of ourselves as doing well, against the trend.”
And Klein realizes that the company will have to expand beyond its regional scope within the next year if it is to grow.
But by far the biggest risk, he noted, is the company’s hefty revolving debt. To finance its growing business and reduce its debt, Brajdas is constantly “going to the bank” for loans, and rising interest rates have been damaging the bottom line. Although growth thus appears to be a two-edged sword, Klein points to “extremely strong and deep” backing from Barclay & Co. as a saving grace.
