’90s Rebound Continues; Company Tries Move Into High-Speed Optical Communications
Meade Instruments Corp., the world’s biggest telescope maker, stepped up its international expansion while continuing to dominate the U.S. amateur telescope market, jumping to No. 17 on the list of fastest-growing companies based on three-year sales growth of 151.3%.
The Irvine firm posted $132.5 million in revenue for the period ended June 30, compared with $52.7 million for the same period three years ago.
The company was added to the Standard & Poor’s SmallCap 600 Index as of Sep. 1, based on the company’s market capitalization, liquidity and industry group representation. In adding a stock to the index, S & P; closely analyzes the company’s financial and operating conditions, looking for stable businesses that will keep turnover in the index low.
Things didn’t always look this rosy for Meade. In 1986, founder and now chairman and CEO John Diebel sold his company to a St. Louis-based group for $6.5 million, and was retained for two years. He spent the rest of the 1980s watching in horror as the new owners ran his labor of love into the ground. In the early ’90s, when bankruptcy threatened, Diebel and three partners bought back Meade for a mere $1,000. They set about renewing the company’s R & D; and began reworking its product lines.
Diebel’s second go with Meade took off in 1992 when the company introduced its LX200 model, a Schmidt-Cassegrain telescope that many observers say revolutionized the amateur telescope market. The LX200 was the first affordable computer-controlled telescope, coming equipped with a “go-to” function that automatically locates the astronomical object and tracks it as it moves across the sky. Brought to the retail market at $1,995, the LX200 was half the price of other commercially available, computer-controlled telescopes.
This past quarter Meade continued what it termed its “most ambitious” advertising and sales campaign, with ads in dozens of consumer magazines like National Geographic and Popular Science. The company expects its advertising and marketing expenses to continue to increase due mainly to an expanded print advertising campaign aimed at marketing its less-expensive telescope lines.
In addition, earlier this year, Meade forged a contract with Seattle-based TeraBeam Corp. to make optical components and related products for TeraBeam’s planned gigabit optical wireless IP connectivity network for metropolitan areas.
“(TeraBeam) is a very new company and a very new technology and we’re happy to be involved with them,” said Meade CFO Brent Christensen. Acknowledging that the TeraBeam deal is a “bit outside our core realm,” Christensen stressed that “our focus continues to be on our business plan and our core business.”
Meade Instruments hired more than a hundred new workers during the past fiscal year to reach a total of 388 employees in Orange County.
Meade designs, manufactures, imports and distributes telescopes, telescope accessories, binoculars and other optical products. The company offers more than 50 telescope models and more than 250 accessory products, with retail prices of its telescopes ranging from less than $100 to more than $15,000.
The company has attained its hefty market share by providing quality telescopes to the amateur astronomer at highly competitive prices. Outsourcing assembly to cheaper labor pools abroad keeps prices down, but the company still undertakes the most complex manufacturing in Irvine to ensure quality. In addition, all foreign-manufactured components wind up back at OC headquarters for final inspection and shipping.
During fiscal year 2000, the company started an assembly operation in a 26,000-square-foot building in Tijuana, Mexico. Meade sends optical and mechanical components to the Tijuana plant for assembly after manufacturing them at the company’s Irvine headquarters.
“In addition to freeing up space in Irvine and expanding our overall production capacity,” said Steven G. Murdock, president and COO of Meade, “the new facility will give us access to Mexico’s significantly lower cost structure while enabling us to benefit from Irvine’s proximity to Tijuana.”
In the spring, Meade began expanding the Mexico operation by approximately 24,000 square feet, while continuing to expand its Irvine operations.
The company makes most of its high-end advanced telescopes in Irvine, while manufacture of many of its less-expensive telescopes takes place in Taiwan.
Meade has become a major supplier of telescopes to such retailers as Discovery Channel Stores, Wal-Mart, Costco and Sam’s Club. Throughout fiscal 2000, the company sold its products to mail order dealers and to more than 500 specialty retailers.
Although professional and institutional applications of the company’s telescopes are not its primary market, Meade’s Schmidt-Cassegrain telescopes are used by the University of California, Los Alamos National Laboratory, National Radio Astronomy Observatory and NASA/Aames Research. n
