LCC International Inc. completed the sale of its products division this week, the latest step in a long, slow turnaround that is finally producing results for shareholders of the McLean wireless communications consulting company.
Ericsson AB, the Swedish maker of cellular phones, paid $22.5 million for the LCC division, which makes equipment used to field-test wireless communications systems and software to make wireless networks operate more efficiently.
The sale will produce a $4 million pretax profit, said Chairman C. Thomas Faulders III, but more important will enable the company to focus on its principal business--designing and building wireless communications systems.
Founded by Rajendra and Neera Singh, the original power couple of Washington's wireless telecom world, LCC emphasized the "international" in its name by concentrating its business in Asia. When economies in that part of the world cooled, so did LCC's business and its stock. From almost $25 a share in October 1997 the shares skidded to a few pennies above $3 a year later. They've slowly climbed back, closing yesterday at $8.37 1/2.
The Singhs, who now spend their time on Telcom Ventures, an Alexandria investment firm with stakes in several companies, still controlled 55 percent of LCC's stock at the time of the company's annual meeting in May. Rajendra served as temporary chief executive until Faulders was lured away from BDM International Inc. to take charge of the recovery.
The decision to divest the products division had already been made when Faulders took over four months ago. At that time, "the sales pipeline was pretty dry," he said yesterday. "We had to turn that around."
One of the biggest jobs landed recently is a contract worth at least $115 million to design and supervise construction of the land-based supplemental broadcasting system for XM Satellite Radio Holdings Inc. of Washington.
XM is one of two companies building pay-to-listen satellite broadcasting systems. Because the signals can be blocked by mountains and big city buildings, a network of 1,700 repeater stations is being built in 70 geographic clusters.
LCC also won a contract to design and build a wireless phone system in Egypt, one of many countries that are launching new wireless phone networks.
Domestic cellular system work--which slowed down about the same time as Asian business--is picking up again because the wireless phone companies need to upgrade their systems to handle the explosion in usage triggered by recent price cuts and customer complaints about call quality, Faulders said.
The key driver for future growth, he added, will be the next generation of wireless communications systems. First came analog cellular phones, then digital networks and next will be "broadband" services that can handle not only voice calls but also Internet access and even video downloads.
LCC is one of 10 companies participating in a consortium announced Tuesday by Cisco Systems Inc. that is developing an industry standard for the new technology. Cisco, which makes the hardware that handles Internet traffic over conventional cables, said the group's goal is to "stimulate the rapid development" of the wireless Web.
CAPTION: LCC International (This chart was not available)
CAPTION: Chairman C. Thomas Faulders III said the sale will allow LCC International to focus on its core business.