The shares had reached what Papada called an unsustainable high of $75 last August as investors latched onto it as a way to benefit from the dramatic growth in telecommunications and networking. They closed yesterday at $23.
"We've been very, very aggressive in doing the unpleasant things we needed to do."
Those unpleasantries came primarily in the form of laying off thousands of foreign workers who made tiny components that cost $1 on average.
The boom-and-bust cycle in the electronics industry is well illustrated by the ballooning of Technitrol's employment level in East Asia from around 10,000 in early 1998 to 25,000 at the peak last year and back down to around 10,000 now.
That seems dramatic, but other electronics companies caught in the sector's downdraft were doing the same thing, he said, and Technitrol has allowed furloughed workers to continue to live in company-owned dormitories for up to six months.
Analysts said that management has done a good job during this downturn.
But, said James M. Meyer, chief financial officer of Tower Bridge Advisors, an investment firm in Conshohocken, "their outlook is as dim as anybody's."
The company's metallurgic division, under the name AMI Doduco, makes components used in electrical contacts for customers including General Electric Co. and Siemens AG. These parts go into products ranging from controls for electric stoves to electric toothbrushes to automotive-mirror control systems.
Despite the sharp drop in its electronics business, Technitrol's strong cash position and low debt load allowed it to complete the purchase of Excelsus Technologies Inc., of Carlsbad, Calif., for $83.3 million in cash in early August.
Excelsus, with $40 million in sales last year, is the largest maker of the devices that allow an ordinary telephone line to be used simultaneously as an analog phone line and as a digital subscriber line (DSL).
Technitrol has been a big supplier to Lucent, Alcatel SA, Nortel Networks Corp., and other companies whose equipment makes up the backbone of the nascent DSL network across the United States.
"The network is pretty much built out," David Stakun, the firm's vice president of corporate communications, said. Excelsus gives Technitrol a new growth market: millions of potential DSL users.
The idea of broadening their scope in a related market makes sense, John B. Walthausen, an analyst with C.L. King & Associates, said.
"The question is how big DSL will really be. That's a tougher thing to make a call on," he said.
Exchange: NYSE; Ticker: TNL
Harold Brubaker's e-mail address is hbrubaker@phillynews.com.
