Storage Tech: a bright star on computer horizon
Jesse I. Aweida could well be the man with the silicon touch.Skip to next paragraph
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What he touches in the computer business has a tendency to turn to gold. In an industry bristling with competition, Mr. Aweida has nurtured an entrepreneurial sapling into a mighty oak.
Aweida is chairman of Storage Technology Corporation (STC) in Louisville, near Boulder. He founded the company in 1969 and has built it into a $1 billion enterprise.
The company's growth rate is extraordinary, even in the high-powered computer industry. For the nine months ending last October, earnings were $50.4 million, a stunning 61 percent increase over the same period in 1980, on revenues approaching $1 billion.
Industry analysts consistently wax enthusiastic in reports on the company, and its stock has landed on the most-active lists for months running. It currently trades in the $30-to-$35 range, up from a 1981 low of $13.75.
The only real flaw in the company's stock picture is that institutions own 35 percent of the outstanding shares, so there is potential for considerable downward pressure should they become disenchanted with the company.
The company's success comes largely from Aweida's strategy of finding holes in IBM's market and filling them with his own products.
The company started making disk storage products for IBM and IBM-compatible computers back when most manufacturers concentrated on tape storage. Now that interest has shifted from tape to disk, STC holds the leading edge in the technology. A backlog of $420 million in orders indicates something about the demand.
Aweida considers his company to be an IBM competitor, but his product strategy is firmly entrenched in the manufacture of IBM-compatible peripherals.
Plain and simple, he says, the computer systems industry orbits an IBM sun. ''IBM software has become the de facto software in this industry. Manufacturers of noncompatible software have seen their business fall.''
He does not intend to follow suit. ''From the very beginning, our strategy has been IBM-compatible, and that is the way it will stay. Very definitely.''
His current ambition is to enter the mainframe computer market. In 1980, the company opened and quickly sold out a $50 million limited partnership for research and development into building an IBM-compatible processor. It opened a plant in northern California, hired 210 of what Aweida terms ''the top professionals in the field,'' and is on its way to selling a Storage Technology computer by 1984.
Aweida thinks his customers want, and will buy, a total Storage Tech system - computer and storage products - that remains compatible with IBM software. ''It is a logical extension, with an emphasis on what we're good at.''
His strategy sounds simple enough. ''We plan to start in 1984 and then grow very rapidly.
''The only alternative to IBM in a total system will be us,'' he adds.
He hasn't got his mainframe operations off the ground yet. But Mr. Aweida clearly calls his own shots. So far, all of them have been right on target. He expects 1982 to bring $1.25 billion in sales, and his 1987 goal is $3 billion. At the same time, his company is a model of modern management. He keeps a tight watch on sales growth to keep it from overextending the company, and they hold management to a crisp five levels. Storage Tech also reroutes an impressive 6 percent of sales back into research and development.
Mr. Aweida, a Palestinian immigrant, chose to locate his firm in what has become one of the fastest-growing high-technology centers in the country. For total high-tech employment, Colorado ranks third in the country, behind Arizona and California, according to the American Electronics Association. The governor's office expects 9,000 new jobs in the computer-related industry next year, and the focal point is right in Boulder.
According to a University of Colorado economist, Gerald Allen, high technology is the second-fastest-growing industry in the state, behind energy. Employment in the industry, now around 45,000, has grown 8 percent annually, compared with last year's 2.5 percent employment growth for the entire state.
There are some 350 high-tech companies in the state. They include names such as IBM and Hewlett-Packard, but the majority are small companies, many of them in Boulder and many started by executives and engineers who used to work for the big companies.
The tremendous growth in Boulder bears little relation to any practical reasons for locating computer companies here. Boulder is simply a nice place to live. The University of Colorado campus keeps it culturally upbeat; both suburban and urban sprawl are noticeably absent; the weather is pleasant; and Boulder snuggles up against the Rocky Mountains, a top recreation spots.
''The high-technology industry depends on educated people,'' Aweida says. ''The environment here is a big plus in attracting them to this area.''
He came to Boulder from New York, as an engineer for IBM, because ''I wanted to live here,'' he says. He is an avid skier and conducts some of his wintertime business on the chairlifts in Vail. ''When I first started here in the '60s,'' he says, ''there was not much going on. Now there is much more.''
An understatement. High-tech companies pop up around Boulder as if punched out from a computer printer. If they find the right product niche and pay attention to good management, ''There is no question that they can succeed,'' Aweida says.