Lou DeBartelo, EOS Corp

My interview today is with Lou DeBartelo, President and CEO of EOS Corporation in Camarillo (http://www.eoscorp.com). EOS develops high efficiency power supplies used by customers including Dell, Compaq, Cobalt Networks, Cabletron, Micron, and many others.

BK: I understand you're in the power supply business. What is EOS all about, and what market do you serve?

LD: Well, EOS is about providing competitive advantage and value to its customers. We do that by designing power solutions that give them design flexibility, time to market advantages, and cost savings.

At EOS we design, manufacture and market ac/dc power supplies ranging in power from 20 watts to 130 watts. That's the low end of the power supply spectrum. Every piece of electronic equipment needs a power supply.

In basic terms our products convert AC wall-power to DC power. They are used on-board or inside data networking and telecommunications routers and switches. They are also used in flat panel displays and a host of computer and computer peripheral products. Basically, EOS provides the "heartbeat" that allows the components and subsystems to operate.

We are enjoying and capitalizing on our position as the technology leader in the power supply industry. This is the differentiator that allows us to successfully compete in a crowded marketplace. We are not a "me too" product or company. We make the smallest and most efficient power supplies available. Our products are over 86% efficient while leading competitors are averaging 72% efficiency. This means less heat is created and a customer's product runs cooler and more reliably.

Our products are also up to three times smaller than our competitors, which means they take up less room inside a customer's "black box." A small, powerful power source means a designer can use freed up space for designing more applications their customers want. In addition, our products have four times the current density of competing products. As such the market is moving toward us as they use more low voltage, higher current chip sets for data networking, telecommunication and Internet equipment designs.

The market we serve is over $7.1 Billion and the fastest growing segment of the power industry. Largest concentration of our customers is in the data networking, Internet appliance, cable modem, telecommunications and computer peripheral segments.

BK: Who are some of your customers?

LD: Two years ago we had a handful of customers and a handful of products. Today EOS sells over 170 power supply models to many customers in many markets. Our customer base is decidedly blue chip. We sell to some of the biggest name brand companies in the world. Pick a top name or industry leader in telecommunications, data networking, Internet equipment or computing and you'll find an EOS power supply inside or as we like to say you know you have the best with "EOS on-board."

We sell our products to the global market but the emphasis is on North America and Europe. We use a multi-tier sales approach: sales and support to strategic accounts; direct sales to target accounts in North America and through several distributors in North American and Europe. I'm pleased to report that all our sales channels are exceeding expectations this year. We are growing over 100% this year and see that trend continuing for the next 2 years. It's exciting and challenging to lead a company with this level of growth and in such a short period of time.

BK: How was your company founded, and why did you decide to locate in Camarillo?

LD: EOS was founded in 1991 by a few design engineers and program managers that split off from Power One, a very successful power supply company also located in Camarillo. They saw an opportunity to grow a business in what is a very fragmented power industry by designing and selling the world's smallest and most efficient external power adapters. Then, the focus at EOS was on growing market-share in the emerging laptop computer market. You may well have an EOS adapter powering your laptop today.

In early 1998 the company introduced a new line of products called the V-Series of internal power supplies for the fast growing data-networking, telecomm, Internet equipment and computer peripheral markets. Introduction of the V-Series product line is one of the most successful in the history of the power supply industry. They are small, efficient and offer the highest current density available. Today we have over 200 direct accounts and 20 distributors and not one account represents over 8% of revenue. We have manufacturing in Camarillo and also two sites in Asia.

BK: I notice a fair number of power supply companies in the area. As one of the major companies here, what's your theory on why that is the case?

LD: Well, the Interstate 101 highway corridor in Ventura country has many high tech firms. In fact, EOS like many others have been honored by Deloitte and Touche as among the fastest growing high tech firms in southern California. I guess the power supply population can be attributed to Power One. Both EOS and another firm Condor, which is located in Oxnard, are off shoots of Power One. We all enjoy strong growth and sales and access to a solid base of engineering, technical support and other high tech and business professionals. I've always believed people make a company. It's not products, it's not technology. Since I joined EOS in early 1999 we have had the good fortune of bringing in some key people across all departments and disciplines. It is those people that will help us reach our goals. We always have openings for solid professionals and I invite those in the power supply and high tech industries to check us out and come aboard.

BK: What's the hardest part of doing business here for you?

LD: Competing against low cost Asian suppliers. Asian suppliers pay no tariffs or duties and can sell to the same accounts. As the technology leader we don't sell on price but competitive advantage. Even so we need to be competitive. Our core competence is product design and distribution. As such, we will be a virtual manufacturing company leveraging the expertise of world-class contract electronics manufacturers or CEM's to build our product at the highest quality, lowest cost and highest capacity. Our goal is to have a strong core or standard product offering that meets the needs of the general electronics market. This is the market our distributors serve. Conversely, over 40 percent of our business is modified standard or custom products needed by our direct sale customers. These are high volume accounts that require leading edge solutions at a competitive price. To meet this challenge and meet our financial goals we will continue to employ our manufacturing facilities in Camarillo and also a higher percentage of off-shore contract manufacturing partners. This will help us meet customer demand while achieving gross margins approaching 40 percent.

BK: Thanks!