Maxwell Technologies Inc.
The resurrection of Maxwell Technologies Inc. from dying defense contractor to dynamic entrepreneur was one of corporate California’s most remarkable turnarounds last year, a recovery that rewarded its investors handsomely and put the firm at the top of the Times 100 list of stock price gainers.
From a low of $3.25 a year ago, Maxwell’s stock zoomed as high as $25.75 in December. It now trades at about $21 on Nasdaq.
The upturn reflects investors’ early recognition that sales growth and profitability were likely this year after the company suffered steep losses in the fiscal year ended last July. The stock price move validated the sweeping management changes initiated by new Chief Executive Ken Potashner.
During the 1980s, San Diego-based Maxwell was a stodgy but prosperous company specializing in pulsed power technology. It got fat off the Reagan administration’s defense buildup, selling capacitors, systems and engineering services to the Pentagon to help its scientists simulate weapons systems from nuclear explosions and “Star Wars” research to the so-called Super Cannon.
But the end of the Cold War ushered in hard times at what until last year was known as Maxwell Laboratories. It hit bottom during its most recent fiscal year, losing $15 million on revenue of $81 million.
But even as those results were being reported, Maxwell’s turnaround was underway with the hiring in April 1996 of Potashner, who had been part of a team that cleaned up Conner Peripherals before its sale to Seagate Technology in 1996.
Soon after taking the Maxwell job, Potashner made entrepreneurs of his managers, sending them out to look for new markets for Maxwell’s ultracapacitors, which are capable of storing and discharging massive electrical bursts.
Soon the company had four new potential markets identified for its products and was signing development agreements to help bring them to market. One deal involved an “international automotive company” to make power sources for electric cars. Another incorporated Maxwell engineering in a new generation of batteries for portable telecommunications equipment.
The company also signed a software deal with Yahoo Inc., the Internet search company, and a manufacturing agreement with Pacificorp, the Oregon utility, for interruption-free power supplies. Pre-Potashner businesses also bloomed, including Pure Pulse, a food sterilization process, and I-Bus, a customized computing operation.
The upshot is that after five years of revenue declines, Maxwell’s revenue should jump to $100 million this year, with profit exceeding $3 million, said analyst Fred Lacy of Hagerty, Stewart & Associates. Payroll is back up to 620, surpassing the defense buildup peak of 600.
Investors are hoping future chapters of the turnaround story will be even better; they expect big things from Maxwell’s automotive and telecommunications deals.
In driving up Maxwell’s stock price by more than six times over the last year, the market sees the dawning of a new era for Maxwell.
