California Amplifier Rebounds : Strategies: The company’s profits are rising after it switched its focus to commercial products and made a big push overseas.

Last summer California Amplifier Inc. was smarting from major losses and facing a hostile takeover threat. Its stock languished below $3 a share.

Today, however, the takeover danger has subsided, California Amplifier is enjoying sharply rising sales and profits, its stock price has more than doubled and Barry W. Hall is still the company’s chairman and chief executive.

“Our performance has exceeded our expectations,” Hall said. He credited a strategy shift that boosted California Amplifier’s foreign sales while eliminating a struggling defense business and improving its manufacturing methods.

It’s a comeback that looked nearly impossible nine months ago, when takeover clouds hovered over the Camarillo-based company, which claims to be the nation’s largest maker of components for home satellite dishes and so-called “wireless” cable television systems that operate on microwave signals.

After California Amplifier limped through its fiscal year ended March 2, 1991, with a $508,000 loss on revenue of $14.3 million, a Denver investor named Charles W. Ergen last August launched an unsolicited $3-a-share tender offer for the company.

Ergen owned 5.9% of the company at the time, and the value of his bid for the rest of the stock totaled $12.5 million. Among other things, he owns Ecosphere Corp., an Englewood, Colo., distributor of satellite-TV products and a California Amplifier rival.

But Ergen failed to get enough California Amplifier shareholders to sell their stock to give him control. He terminated the bid after buying less than 20% of the stock, but he remains the company’s biggest stockholder with 16% of California Amplifier’s approximately 5 million common shares outstanding.

Ironically, Ergen and the stockholders who refused to tender to him have been rewarded. California Amplifier’s stock, which seldom traded above $2 a share from 1987 through mid-1991, closed Monday at $7.125 in national over-the-counter trading.

The stock has been propelled by California Amplifier’s growing sales and profitability. In its fiscal year ended Feb. 29, the company earned $1.6 million on revenue of $20.6 million. In its first quarter ended May 30, things got even better as profit soared to $754,000 from $127,000 a year earlier, while its revenue more than doubled to $8.2 million from $3.5 million.

The rebound took full effect after California Amplifier jettisoned its ailing defense-products business in early 1990 and focused on its commercial lines. Moreover, the company began a major push overseas, which has helped maintain its growth in the face of fierce competition--and subsequent price cutting--in the U.S. market.

Over the past two years, California Amplifier has opened sales offices in Paris, Taipei, Taiwan, and Sao Paulo, Brazil, and the result has been that foreign sales in fiscal 1992 accounted for 40% of the company’s total sales, up from only 11% the prior year.

How far does Hall want his foreign sales to rise?

“We don’t really put a limit on it,” he said. “If we had to ship everything overseas, we’d do it. But realistically, we’ll always have a large foreign segment.”

Europe is nearly as competitive as the United States, “and not really profitable for us,” Hall said. Asia and Latin America offer more potential because there’s far less competition and profit margins aren’t eroded by price cutting, he added.

California Amplifier’s components primarily amplify the weak signals that a dish receives from a satellite. Other products take signals that arrive on microwave frequencies and convert them to the radio frequencies that TV sets use.

Hall, a 44-year-old who took over as chief executive in early 1989, estimated that his company has 50% to 60% of the U.S. market for such components, followed by Norsat International Inc., a Canadian company. But Norsat tallies the numbers differently.

“I would agree that we are 1 and 2, but I wouldn’t necessarily agree with their ranking,” said Rick Nissen, Norsat’s vice president for satellite TV products. He said the rankings “can vary from year to year.”

In any case, both companies are hurting from declining U.S. sales of home satellite dishes, which are mainly sold in rural areas where cable TV is unavailable. There are about 3.6 million such dishes in the United States, but the recession is hurting sales and dish component sales are down 20% this year, Nissen estimated. That’s led to the price cutting because the manufacturers “are scurrying for a smaller amount of business,” he said.

But California Amplifier’s foreign sales have enabled Hall to boost his company’s employment to 235 from 120 a year ago, and to ratchet up its research-and-development spending to $835,000 in fiscal 1992 from $356,000 two years earlier. The company also is not burdened with debt, with long-term debt totaling a mere $102,000 against a net worth of $4.5 million.

Those figures don’t erase the question of whether California Amplifier can sustain its improved performance in the face of the weakening U.S. market. If it stumbles, might the company be hearing again from Ergen or some other unwelcome bidder?

Hall said California Amplifier is able to offset the price cutting because the company has overhauled some of its manufacturing techniques so that “we’re one of the lowest-cost producers in the world--we feel we can keep up with anybody” on pricing.

The company also is trying to exploit specific markets where prices, and profit margins, are more stable. For example, cable TV companies are building new dishes to receive signals from a recently launched satellite, and California Amplifier is selling the companies newly designed components.

Hall also is not looking over his shoulder for Ergen, who declined comment on his California Amplifier investment. Among other things, the company adopted a “poison pill” anti-takeover provision after Ergen’s bid that effectively makes another hostile bid prohibitively expensive by giving existing stockholders rights to buy additional shares at a discount.

Ergen and Hall keep their distance these days. With the exception of occasional meetings at trade shows, they seldom talk.

“He doesn’t call me up and ask what’s going on,” Hall said.

And don’t look for Hall to amplify what’s going on at his company, rebound or not. He knows California Amplifier’s improvement has been notable, but is still new.

“We’re not gloating over our success,” he said. “We just intend to keep working hard.”

California Amplifier Inc. at a Glance California Amplifier Inc. manufactures components for satellite dishes and wireless cable-television systems. The components, among other things, amplify and strengthen satellite TV signals so that the dish system works properly. Founded in 1981, the Camarillo-based company currently employs 235 people.