A graphic in Monday's Washington Business section incorrectly reported the stock ticker symbol for MLC Group Inc. of Herndon. The company's symbol is MLCH until Nov. 1, when it will change to PLUS. (Published 10/27/1999)
Phillip Norton, chairman of MLC Group of Herndon, former college football player and high school basketball coach, hates to lose, but he derives an almost perverse pleasure from taking the occasional hit.
When he was a young salesman working for Memorex in the 1970s, Norton and his team were practically thrown out of a Richmond bank after trying unsuccessfully to fix the disk drives Memorex had sold it. The bank officers killed the deal they had with Memorex, then a start-up company. That meant huge losses.
Worse, news of the botched deal spread quickly. "It was a small town and everybody knew we had failed," recalled Norton, who at the time had been with the company for only a few months. "My first thought was to change businesses."
But the thought was fleeting and Norton stayed, going on to become Memorex's number one salesman, and eventually capturing more than 50 percent of the Richmond market for disk storage.
The experience has stuck with the former Navy linebacker for 25 years. "It was fun getting beaten down," says Norton, now 55.
His company, which primarily leases computer equipment to businesses, has increased its revenue from $26 million in 1993 to $194 million in the year ended March 31. The company reported 1999 net income of $6.7 million.
Next Monday, MLC will be renamed ePlus Inc., to reflect its new emphasis on electronic commerce, an aspect of the company Norton has not played up until now.
"We hired a marketing consultant to help us analyze what we are doing and what we are providing," Norton said. "We were being looked at as a financial services company when in fact we were really an e-commerce supply-chain-management company."
Norton's company was already providing technology to customers for online procurement and purchasing of equipment and services. In addition, it was helping customers track assets electronically. "We make it seamless and paperless," he said.
After working with the consultant to figure out how to emphasize that part of the business, Norton came up with the new name. The "plus" comes from PC Plus, a computer and software reseller that MLC acquired in July 1998, and the highly popular letter "e" was tacked on for obvious reasons.
Presenting itself as an electronic commerce company is certainly a way to help pique investor interest. The company's stock, which trades on the Nasdaq Small Cap Market, has been sluggish. It closed yesterday at $8.87 1/4.
But the "e" in the new name is not a merely a tease; the electronic commerce it promises is real, analysts say.
"They do provide a lot of services to clients that they probably weren't getting credit for," said Rob Schwartzberg, managing director at Friedman, Billings, Ramsey Group.
"I think the Internet suits the company very well," added Keith Davis, a research analyst with FBR. Value-added reselling, asset management and leasing all are naturals for Internet commerce, he said.
Norton is approaching the debut of ePlus with caution. The company has slowly been adding technology for electronic commerce solutions.
"The difficult thing is not rushing to deploy it to everybody immediately without making sure we've figured out all the pieces that go with it," he said, adding company owners have a tendency when they "know they have something that has real pizazz" to rush to pump up the stock price, for example.
Back in 1996, shortly after MLC went public, the company frustrated investors when it failed to follow through on its original plan to acquire as many as a dozen smaller leasing companies. The leasing industry got hot, and prices started to rise, so Norton decided to wait on the sidelines, making two acquisitions of non-leasing companies.
"The market was disappointed," Schwartzberg said.
However, Norton's patience was rewarded. "The whole leasing sector or subsector has been particularly under pressure because of some people who got into that market and totally messed up," Schwartzberg said.
Norton can now bargain-shop for companies, having avoided the overinflated prices of the mid-1990s. And his acquisitions are no longer disappointing to investors. Earlier this month, in a cash and stock deal worth $36.5 million, MLC acquired CLG Inc. of North Carolina, increasing the company's lease assets by 80 percent and adding 400 customers, bringing the total number to about 2,000.
In two weeks, Norton will head to the Piper Jaffray investment conference, his first big outing to talk up his company's new direction.
"What we have to do now is get out and tell the story," he said, "trying to emphasize who we are and what we are changing into."
A Look at ...
MLC Group Inc.
Chair: Phillip G. Norton
Business: Leases information technology equipment to companies and also provides financing. Will soon change name to ePlus to reflect its growing use of online commerce.
1998 revenue: $194 million
Ticker symbol: MLC on Nasdaq Stock Market (changes to PLUS on Nov. 1)
Web address: www.mlcgroup.com