BUYING A SMALL BUSINESS

When a Billion-Dollar Company Ain't Enough

Profile of a CEO's struggle to build lasting value in his growing company.
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In 20 years Terry Theye has turned ideas and energy -- the only assets he began with -- into an Inc. 100 company approaching $1 billion a year in sales. But thanks to an economy in which lasting value is getting harder and harder to achieve, he still isn't home free

Terry Theye displays a couple of large photos of golf-course scenes on the wall behind his desk. One is of the famed and treacherous 16th hole at Augusta, with the morning mist coming off the water hazard fronting the green. Theye is a trim, soft-spoken man of 50, as serene and self-possessed as the image on his wall. In a starched blue shirt, monogrammed at the cuff, he looks every bit the part of a successful corporate strategist, mulling his next move from the hushed fifth floor of Cincinnati's Bank One Tower, where his company's offices are located. Having shrewdly maneuvered through one shakeout after another in the brutish world of computer reselling, Theye has built himself an empire from which he can periodically jet off to one of those exotic golf spots glimpsed on his wall.

At least, that's how things seem. But appearances break down when Theye gazes wanly out the window on an austere winter's day and remarks, "I'd love to be down in West Palm Beach right now playing golf, but I can't. I have to be here." A thin smile creases his face. "Someday I'll get there."

For a decade now Theye has been offering himself similar words of comfort as he has continually reshaped his company, the Future Now Inc. (TFN), to withstand the hazards of a cutthroat industry. Five years ago there were 50 large national and regional computer resellers like TFN. Today there are 7, and within two years, almost everyone in the industry agrees, that number will boil down to no more than 3. Theye, of course, is betting that TFN will make its way into the elite group that ultimately triumphs. But for now he is just where he has been for too long: a step away from having created a company suffused with the kind of market-affirming megavalue that makes the entrepreneurial odyssey worthwhile.

In his tenure at TFN, Theye has sold the company, bought it back, taken it public, and merged it with a multibillion-dollar distributor -- all in an ongoing scramble to ensure the company's survival and create value for its long-suffering shareholders. Despite all the wheeling and dealing, TFN's stock was trading at just one-third its all-time high when the company announced its intended merger earlier this year.

"We've had a lot of wins but not much to show for it," admits Theye. "That doesn't leave me with a warm feeling."

With so many victories behind him, Theye should feel as warm as the Georgia sun in April, instead of enduring what must seem like an endless midwestern winter. After all, TFN earned the #51 spot on the Inc. 100 in 1993, rising from the 63rd slot the year before that; the company is also a graduate of the Inc. 500 ranking of the nation's fastest-growing private companies, having earned spots on the list in 1989 and 1990. But although TFN's sales have never been higher, its margins have never been lower. That Theye isn't free to head for the first tee says less about his company-building prowess than about the tedious task of trying to create lasting value in an economy in which its very definition seems to be forever changing.

Not so long ago an entrepreneur like Theye could set out to build a business, and if his idea was good enough, if he had enough energy, then he would likely succeed and create material rewards for himself and his shareholders. But nearly 20 years after founding his company -- and growing it to $800 million in sales -- Theye still struggles to build ongoing value. Prior to TFN's merger with computer distributor Intelligent Electronics (IE) -- announced in March -- Theye's stock options remained worthless because of the depressed stock price. He also owned 90,000 shares of TFN common stock, worth $6 apiece, down about 40% from their initial-public-offering price of $10.25 in July 1991. The stock market, meanwhile, valued TFN at just $45 million -- scarcely .05 times last year's revenues. Even IE paid no premium for the shares when the companies merged. Notes Dennis Hummel, TFN's senior vice-president of operations, "None of us had any idea it would be this difficult to preserve value in this company. It's been the hardest thing for us, particularly when you consider how much energy we've put into it all these years."

It used to be that businesspeople knew value when they saw it. It was fixed and lasting, contained in such reliable measures as mineral wealth, productive capacity, and the land people walked on. The computer industry, in which Theye has earned his daily bread for nearly a quarter century, is a signal example of that belief turned on its head. The price of what is tangible -- hardware -- keeps falling. The software that drives the machines becomes a proportionately greater store of value. But with software, the barrier to entry is so low and the mobility of vital intellectual power so great that value is left open to persistent attack.

The computer-reseller industry is as old as the personal computer itself. At 14 years old, the PC market operates with all the boisterous unpredictability of adolescence. The mood of the market shifts wildly, as do loyalties. Rebellion against whatever form the status quo takes is the norm.

Resellers get little respect because they operate in the food chain as "configurers" and integrators of computer equipment, customizing systems to meet clients' needs. They often buy from distributors, and so they constitute a second, seemingly redundant link in the chain of an industry moving fast toward commoditization. The typical customer is a business looking to squeeze greater use and efficiency out of computer technology, and to do that it must depend on the expertise of resellers like TFN. (About 80% of TFN's volume goes to Fortune 1,000 companies.) But the squeeze is on margins as well as the technology. In 1993 TFN netted just 1.3% in profits on $700 million in sales. Last year the company took a restructuring charge to find new efficiencies -- and to raise profitability.

TFN operates in a universe of $1-billion companies with strange, futuristic names such as Entex, Vanstar, and CompuCom. So far it has escaped fatal collision with those giants because, as Theye puts it, "we have a good business model." And what best defines that model is Theye's willingness to continually reconfigure TFN as if it were a computer system, acting swiftly and completely to meet a dynamic market. He has not grown wedded to his own ideas in the face of the constant need for change. "This is not an ego thing with Terry. He's not an entrepreneur who has built something up and must have his arms around it at all times," says Dick Sanford, chairman of IE, which has been a strategic partner with TFN and will soon be its parent company.

Theye has saved his company by periodically reinventing it. What follows is a look at some of those incarnations.

* * *

Phase One

Switching Products:
From Word Processing to a Shot at the Big Time
Back in 1986 Terry Theye still enjoyed a luxury he cannot imagine today: he could make a mistake. He could even laugh about it.

At the time, Theye and two partners were running a business they then called Cincinnati Word Processing (CWP). Theye recalls getting a call from a manufacturer entreating CWP to carry its surefire hit product. Theye demurred, later commenting to his partners with a scratch of his head, "Can you imagine someone naming their company 'Apple'?"

Parochial in scope and ambition, CWP sold one product, Wang Laboratories' word-processing equipment, out of offices in four midwestern cities: Cincinnati, Columbus, Dayton, and Louisville. CWP targeted customers that did a lot of typing and data entry, such as the legal community and the state government, and it grew smartly from zero in 1975 to about $5 million by 1985. The business generated gross margins of 25%. But then a novel device entered the business scene, something called the personal computer.

By late 1988 Theye had aggressively repositioned CWP, moving it away from peddling word-processing equipment to carrying PCs. To signify the shift in market emphasis, Theye changed the company's name to the Future Now, adopting that moniker from a company CWP had acquired earlier.

Theye's ability to abandon word processing -- before it abandoned him -- reflected more than his willingness to rectify his own mistakes. It also demonstrated a curious but ultimately necessary aspect of Theye's business behavior. To ensure TFN's survival, he has not allowed himself to become attached to any of the company's components. Early on, he even sold TFN to save it. Such detachment comes more naturally to Theye than to most company builders, for he is an accidental entrepreneur.

After 13 years at IBM Corp., Theye was recruited in 1973 to establish a midwestern market for Exxon Office Systems, a vendor of word-processing equipment. Two years later, with the energy crisis in full swing, the oil giant got out of the information business to concentrate on the rush to develop fresh reserves of oil and gas. Exxon offered to sell the division to Theye and two partners. The three took out second mortgages on their houses, and thus was born CWP, the company that would later become known as the Future Now, one of countless purveyors of personal computers.

The industry in those early years was wide open, drawing thinly capitalized entrepreneurs with the lure of exploding sales. Neatly hidden was the hook of collapsing margins. "We were soon running out of money," Theye notes.

He knew he had to put CWP on a sounder financial footing if it was to weather the inevitable shakeout, and in 1985 he found deliverance. He sold CWP to a local investor who owned a couple of soft-drink bottling plants, giving it a much-needed cash infusion. Theye stayed on as president, preferring to act as a hired hand with no equity rather than struggle along as a broke entrepreneur with a cash-starved business.

But Theye was also a dogged optimist. He figured if he stayed around, something might break his way.

It did. His buyer had actually purchased the company to give his son, returning from the West Coast, something to do. Two years later the young man headed west again. By then the bottler could no longer stomach the risk associated with such a fast-moving business and wanted to sell out. He helped Theye find a local investment banker willing to structure a leveraged buyout of the company. The banker would take an equity stake in the company while helping to find Theye a lender to finance the balance of the purchase, which meant dumping a load of debt on Theye's shoulders. "That was an emotional time," Theye recalls without a trace of emotion in his voice. "Now the risk was on my shoulders." And still, there was no money in his pocket.

Fourteen years after he'd founded the company, Theye's equity amounted to zero. Nonetheless he had grown a $20-million business, engineering its financial survival along the way. And now that he was back in control, he had the chance to get rich.

* * *

Phase Two:

Getting Big Fast:
Finding Hidden Value in Acquisitions
Terry Theye approaches his business the way the pros play pool. They can see the game being played out before them in time and space. If one shot is properly gauged and struck, it sets up ensuing ones that in turn create new possibilities. Without that ability to visualize, Theye would likely have made himself half a name as the fellow who sold a bundle of those obsolete word processors.

As Theye imagined it, his LBO of TFN was actually the first step toward transforming it into a public company with deeper pockets. It worked this way: With the proceeds from a planned IPO, Theye cashed out the merchant banker whose loan for the LBO had, in turn, cashed out Theye's earlier investor. On an operating level, the IPO provided vital working capital that allowed Theye to -- again -- change the business model.

What Theye saw before many of his competitors did was how fast the industry was consolidating, eroding margins and raising the need for cash. Now the company that began in 1975 as a sleepy little word-processing-equipment company would become an aggressive acquirer in the high-growth computer business. "In 1989 we were a $20-million company," recalls Theye. "We knew we needed to become a $100-million company in the next two years to survive."

Between May 1989 and September 1993 TFN went on an acquisitions binge, buying 11 other resellers. In the midst of that splurge, TFN went to the public markets twice, raising $20 million through an IPO in July 1991 and another $21 million in a secondary offering 18 months after that. Theye's hard years of labor had finally translated into something semitangible -- 90,000 shares of TFN stock, or 2.5% of the company. But he has sold none of that stake. For a time Theye was a paper millionaire as TFN shares rose to $18 in the spring of 1992, before sliding all the way back to $5 at the end of 1994. More to the point, Theye surpassed his $100-million, two-year target. In 1991 TFN revenues hit $139 million. Two years later they would soar to $702 million and produce a net profit of $9.3 million.

Theye's acquisition strategy was to scoop up viable competitors in cities throughout the Midwest to gain tighter market coverage and offset shrinking margins. The target area was rich with entrepreneurs who had jumped into the business, but with their sales and costs collapsing back on them, many lacked the will and the resources to continue the struggle. They were eager to gain a business partner with deeper pockets; several of them came aboard TFN as branch managers.

Theye knew he was buying more than market share and market coverage. In the good resellers, he saw hidden -- and hitherto undeveloped -- assets: people.

Even though computers were fast becoming a commodity, Theye and his managers believed that too much of a retailing mentality prevailed in the industry. As Dennis Hummel puts it, companies were content to let "pimply-faced kids earning $3.50 an hour" sell expensive, sophisticated equipment. Manufacturers drove that dynamic, he notes, going so far as to limit sourcing by awarding "authorized" dealers medallions, which would then be displayed in the dealers' store windows. Theye and Hummel, who concentrated on integrating TFN's acquisitions into the mother company, believed there was a bigger market in doing the opposite: sending sales and service people into the field. "It became evident to us that 'outbound' selling was more lucrative," says Hummel. Theye and Hummel realized they weren't going to get rich waiting for people to walk through the door and selling one computer at a time.

TFN's first major acquisition typified how Theye's vision conflicted with the status quo. In 1989 TFN bought the Thomas Brush Co., a $20-million reseller in Indianapolis. Hummel moved to Indianapolis for nine months to effect the transition at Thomas Brush, where he found a curious regimen. "Salesmen had to sign out to go make sales calls," says Hummel. "They even had to take turns vacuuming the store at the end of the day."

When obsolete merchandise came back from a customer, all ordering of new merchandise was halted until the sales force worked off that inventory. Company founder Thomas Brush, notes Hummel, had an obsession with inventory. "He worried about shrinkage. He moved all the inventory to his father's auto-repair shop and built these chicken-wire cages to keep it in," says Hummel. "This was two miles from the branch, and the sales reps had to keep running back and forth to get the stuff. You'd walk into that garage and there would be guys working on cars with the headers off. You couldn't hear yourself think."

Hummel went to Indianapolis and unlocked the asylum. He retrieved inventory from behind the chicken wire. He liberated the salespeople from the store and put them into the field to beat the bushes for customers. Out back, Hummel had pegged the technicians, casual in T-shirts and jeans, as "a very tight and talented crew." They knew a lot about computers. He made them dress up and put them out front, where they could talk to customers. By 1993 TFN had more than tripled Thomas Brush's volume, to $76 million, and that first big acquisition would prove a model for unlocking value from those that followed.

Still, Theye knew, volume alone could not sustain TFN. He had to find a way to keep adding value ahead of his competitors.

* * *

Phase Three

Going Corporate:
Targeting the Most Profitable Customers
Theye's spate of acquisitions set TFN up for its next revision of the business model. The company would progressively become a reseller to businesses -- big businesses, to be specific. Five years ago Fortune 1,000 companies accounted for 30% of TFN's volume. Today such companies account for 80% of sales, and that figure accurately reflects the TFN management's marketplace bias.

A troika of managers runs TFN: chairman Theye, along with president Lewis Miller and senior vice-president Hummel. Miller and Hummel, more voluble variants of Theye, focus on operations. Theye studies acquisitions, while the other two spend time pumping up the sales force and tracking daily developments. But all three are IBM veterans, and they share similarly buttoned-down beliefs.

One thing all three agreed on back in the late 1980s was the coming bifurcation of the industry, a growing split between the companies that served retail and the ones that served commercial customers. Although TFN's acquisitions orgy -- with its accretion of storefronts -- was bringing the company increasingly into the retail orbit, TFN knew it needed to get into the executive suite.

Faced with a similar choice, many competitors simply deferred it. Companies like MicroAge and ComputerLand (now Vanstar) built retailing empires while also pursuing commercial accounts. Theye, Miller, and Hummel chose to do one thing: serve the commercial market. They were corporate people. They knew how corporate people thought. They knew what corporate people wanted. "Retailing is an investment in brick, mortar, and glass," says Miller. "That's not who we are. We are not people running around in little orange vests." Although there might be money in retail, TFN's management knew the commercial market was wide open.

By the late 1980s corporate America had grown hungry for the efficiency that computers seemed to promise. Making the market even more attractive, says Hummel, was an undersupply of resellers ready to serve the corporate market in the way it wanted to be served. After all, no self-respecting corporate buyer would head down to the local mall and buy 200 machines from a teenage clerk. "Corporations were looking for someone to get off the retailing bandwagon and get on the professional motif," Miller says. "Their attitude was, 'We are used to talking to professional salespeople. Where are they?"

Theye, Hummel, and Miller would create them -- and would offer them up to the corporate client. TFN shut down retail outlets as fast as it acquired them. Disappearing from strip malls, those outlets resurfaced in upscale office-park complexes out along the interstates ringing the city sprawl. Their hours were now 8 to 5 instead of 9 to 9. TFN stores were reincarnated as "solution centers," well-appointed showrooms where corporate customers were welcomed by appointment only, where vendors were invited to come and demonstrate their latest wares. "It was a more businesslike atmosphere," says Hummel, "a demonstration area where you didn't have to fight your way past the knee nibblers and the tire kickers." The sales force called on corporate customers, drawing prospects into the solution centers to be dazzled by vendors' latest releases.

Showing its true colors -- Big Blue -- TFN's management also imposed a dress code. "We told them, 'Guys, it's white shirts and ties. Ladies, slacks are not appropriate in front of a customer," recalls Hummel. In November 1989 TFN opened its first solution center, in Indianapolis, sending out invitations to local businesses. The appointed evening arrived, and the weather was miserable, raw and rainy. Hummel looked gloomily out the window, wondering if anyone would show. Half an hour later the parking lot was full. "We had the place packed to the gills," he says.

The solution centers embodied TFN's central strategy for staying ahead of the competition. In the last five years, largely on the strength of that dedicated focus to the commercial market, TFN has grown its acquisitions at an average rate of 30% a year, taking the company from $80 million in sales to $800 million. A lot of money has been flowing through the company, but precious little of it has been sticking. Even as sales have been exploding, profitability has been declining.

Which means, of course, that Terry Theye has yet to strike it rich.

Phase Four

Finding a Financial Godfather:
Spreading the Risk
One of Terry Theye's strengths is the ability to leverage the skills of others when he needs them most. Just as he found a buyer and a banker to revive TFN from its earlier near-death experience, Theye recruited fellow IBM-ers Miller and Hummel to make the trains run on time as the organization grew and became more complex.

By 1992 Theye knew he needed somebody to see through the red ink to the soundness of his overall plan. TFN's basic problem was merely a hyperaccelerated version of the quandary Theye first encountered back when he was selling word processors to law firms in Cincinnati. As with any young and growing market, there was the potential for making big money in computers. Like a plane shifting altitudes to avoid turbulence, Theye kept moving to a higher level, hoping to settle at a spot where the air was smooth but not too thin. He knew he could get to that profitable altitude if he could rise above the industry fray. But TFN could not escape it. "We didn't think margins would collapse so fast in 1993 and 1994," admits Miller.

Margins, in fact, were coming down as fast as Theye could acquire struggling competitors and grow their sales. Five years ago TFN generated gross margins of 22% on hardware sales. Last year that number was 8%. Net margins, already thin, were growing anemic. From 2.2% in 1991, net profit was nearly halved, to 1.3% in 1993. Last year was especially brutal. The company took a $40-million write-down after all its acquisitions. "We had a lot of duplication in warehouses and distribution," explains Theye.

In the midst of its heavy acquisition phase, when it was dangerously close to draining its reserves, TFN had found a financial savior in Dick Sanford, the acknowledged godfather of the computer-reselling industry. Sanford is the founder and chairman of Intelligent Electronics, a $3.2-billion "master reseller," or distributor, of computers. At that time TFN bought nine stores from IE in exchange for stock. "It got us key financing so our business model would survive," says Theye.

Unlike its competitors -- virtually all of whom are under water or in the throes of restructuring -- IE sits above the fray with $140 million in cash on its balance sheet. Sanford has always been allergic to debt and dismissive of those who grow dependent on it. "We don't believe in banks," says Sanford. "Our company is driven toward not getting ourselves into a position where we have to go to them." Of his industry peers he says, "Most of these companies are way underfinanced. Only the organizations that are well financed and well connected will survive."

Sanford intends that TFN be well connected -- and that it survive. Last year Theye, faced with a cash crunch, turned to IE once more. "We had a liquidity problem," says Theye dryly. "Sanford solved it by helping little brother. He infused $40 million in cash into our business, and we gave him five of the nine stores back."

That $40 million proved to be just an ante. In March IE and TFN agreed to merge, in a swap of each other's stock.

The relationship between the Future Now and Intelligent Electronics reveals Theye's latest strategic maneuver in a turbulent marketplace -- vertical as well as horizontal consolidation. TFN will now buy most of its hardware from IE, making it, in effect, TFN's warehouse. That eliminates TFN's inventory risk. "There's no reason for Terry to carry inventory at 26 locations," says Sanford. "It's absurd. Why don't I hold it and ship it to him? He becomes over time the representative of services to manufacturers. He has outsourced a lot of his costs."

And that offers TFN a welcome flexibility in the fast-moving hardware market, in which technology turnover occurs every six months and, as Hummel notes, "product obsolescence is the grim reaper." In 1994 Hewlett-Packard introduced 65 new products, while Compaq and Apple each brought out 50, according to Carolyn Ruech, TFN's vice-president of marketing. Resellers dread getting stuck with obsolete inventory or, conversely, clearing out old inventory while not having the new machines on time. With IE as his big brother, Theye no longer has to worry about either predicament.

Furthermore, "Dick Sanford is so big that he's got the attention of the major manufacturers," says Hummel. As a result, manufacturers are not about to overstock inventory or let it get obsolete. That would clog a huge channel for new product offerings.

The IE-TFN combination promises big numbers. Sanford plans for IE to become a $10-billion company by the year 2000, with TFN, headed by Theye, as a $3-billion-plus subsidiary. Sanford and Theye hope their combined clout will give them the economies of scale they have been so desperately pursuing.

With the merger Theye will be able to count on IE to give him efficiencies on the hardware side. Too bad that's not where the profit is anymore.

* * *

Phase Five

Chasing Fat Margins:
Leaving Hardware Behind
What Dick Sanford, the godfather, has allowed Terry Theye to do is, in essence, offload all the risks associated with hardware. Theye's current business model embraces the opportunities that software and related services present, which is where future value lies.

To hear Theye tell it, TFN today is an $800-million company selling little more than air. Keeping that air rich with the oxygen of decent margins is the trick. "We need to stay at the leading edge of technology, and that really means staying at the leading edge of software and consulting services," says Theye. "The days of making money on hardware are long gone."

It was a good five years ago that Theye, with the millstone of hardware hanging heavy around his neck, began moving the company upstream into the consulting and software-services markets. Last year services accounted for 9% of sales but 40% of gross profit. Gross margins on professional services are 35% -- or more than four times greater than gross margins on hardware.

But within that promise there still lurks the same old hook of compressible margins. Hummel explains that TFN "needs to stay at the leading edge of the services envelope." In other words, high-skill services relating to integration and networks bring good profit because the demand for technical assistance currently outstrips the supply of technical assistants. More traditional "break-fix" services, says Hummel, "are break-even at best," down from 30% gross margins just five years ago. That creates new pressures.

To make the service end of the business flourish, says Theye, "we need high-level technology people." TFN's total payroll, at 1,450, has not changed in a year, yet it now has 650 people in services, 220 more than a year ago. That requires "sizing" the organization, as Miller puts it, reengineering jargon for hiring people with needed skills to replace those whose skills may not be applicable any longer.

In effect TFN is now trying to shift its mix of skilled people just as radically as it once moved from word processors to PCs or from retail customers to corporate buyers. But changing a company based on salespeople to one with greater need for technical people can't really be done through retraining. "It's very difficult to convert a product salesperson into a services consultant," says Mike Melenovsky, director of business-service strategies at International Data Corp. (IDC), a research firm. "It's like trying to take a used-car salesman and make him a management consultant."

Of course, as has been true throughout its profit-chasing life span, TFN isn't exactly boldly going where no competitors roam. The kinds of employees it wants to recruit are very much in demand. "This has always been a predatory industry when it comes to people," acknowledges Carolyn Ruech. In the past competitors lured away superstar salespeople who brought their customers with them. Now they home in on technical people.

But Theye is not exactly unfamiliar with that kind of fierce competition. No matter how his business model has shifted, he has shown no fear of crowds, whether in battling for PC customers or negotiating the switch to services. TFN and its competitors "face the same issues," says Traci Bair, senior analyst for IDC. "They have all been looking to carve out a niche in services, which in certain areas will be more competitive than hardware sales." According to Melenovsky, TFN's move into services will soon bring it into uncomfortably close proximity to such giants as EDS and Andersen Consulting. "The Future Now's greatest strength is that its management has a vision, but it still needs to identify its buyers," says Melenovsky.

For Theye that means only one thing: there's yet another business model on the horizon. And if he knows what it will look like, he's not telling. But he keeps the bigger picture resolutely in focus. With the IE merger, and mergers like it between other distributors and resellers, the industry has begun to consolidate yet again. Theye hopes that signals a threshold at which margins will begin to stabilize, the service business will find its niche, and IE will flood the pipeline with hardware. "That will be an end point," he says, sounding half-convinced.

Theye has now moved out from behind the big desk in his quiet and uncluttered office to sit at an oval-shaped table. He forms a portrait of composure that contrasts with the carnage in his industry. Ask him about all the uncertainty and he is not sad, not glad, not mad. He could just be numb.

He's only too aware of how Wall Street views his efforts. Kevin Morrow, an analyst with the Ohio Co., a regional brokerage in Columbus, is hardly dazzled by the IE deal. "There's nothing really to get excited about here," Morrow says flatly. He notes that TFN got a good deal -- with IE's backing, it can look beyond the next few quarters. "But for TFN shareholders this was not a good deal," Morrow adds. "IE paid no premium for the stock. TFN will gain strength by becoming a division of IE, but it will lose its public identity. Terry Theye obviously decided he'd rather be a survivor than a nonentity."

Surviving, it turns out, is what Terry Theye is all about. After all, for 20 years he's been struggling to build solid value into his creation. By now Theye ought to be confidently sitting back in his well-appointed office, recounting the big IE win, among others, and thinking of hitting the golf course. Instead, he can only laud his endurance skills. "We've survived so far," he says matter-of-factly, "but there's not a lot of time to sit back and congratulate ourselves."


WINNING UGLY

The numbers are not pretty, but then the Future Now Inc. (TFN) operates in a less-than-glamorous environment. "The whole industry is ugly," says Kevin Morrow, an analyst with the Ohio Co., a regional brokerage based in Columbus. Still, Morrow expects TFN to survive, despite margins that could shrink by at least 25% this year. "TFN will make it," he explains. "It has a large customer base, it's growing its professional services quarterly, and the best thing it has going for it is its tie to Intelligent Electronics." Here's how the company has fared in recent years.

Revenues (in millions)
1991: $138.7

1994: $811.1

Net Income (in millions)
1991: $3

1994: ($41.5)

Net Margin
1991: 2.2%

1994: (5.1%)

Stock Price
12/31/91: $10.25

12/31/94: $4.50

Total Market Capitalization
1991: $30.4 million

1994: $34 million

NOTES: 1994 revenue, net-income, and net-margin figures are based on estimates by the Ohio Co. The 1994 net loss includes a $40-million restructuring charge, which TFN took in the second quarter of 1994. n -- Stephanie Gruner

Last updated: May 1, 1995




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