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TESSCO's behind-the-scenes wireless work

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TESSCO Technologies supplies 30,000 different products to the wireless industry, the vast majority of them the sort that the nation's cellphone users don't see or hardly notice. Antennas. Cable. Industrial surge protectors. Ceiling tile enclosures that hide wireless access points.

The Hunt Valley company has a profile that's just about as low — never mind that it's one of Baltimore County's larger employers, with about 700 people in the region and another 140 out of state. Its customers know what it is — TESSCO ships 5,000 orders every workday — but the general public doesn't.

"It's kind of like a hidden entity," said Doug Rein, TESSCO's senior vice president of operations and fulfillment, over the roar of forklifts and conveyor belts at its warehouse. "It's a well-kept secret, not that we want to keep it a secret."

It's not surprising the company is squarely behind the scenes in its work as a distributor, selling other manufacturers' goods with custom tweaks. But in January it launched its own line of products under a new brand, Ventev. TESSCO hopes that division will make a name for itself — in the market for behind-the-scenes stuff, anyway.

Ventev sells wireless-infrastructure products to businesses and ancillary merchandise for consumers' phones, things like chargers, cases and tempered-glass screen protectors. TESSCO made products for years, but they were for the "private label" market, with other companies' brands on the packaging.

"The time was ripe for us to do this," said Scott Franklin, who works in marketing for the Ventev division.

It's a logical step for the company because TESSCO makes more money when it manufactures its own products. Ventev accounts for about 10 percent of its parent's revenues but a "significantly higher" chunk of profits, said Jeff Lime, vice president of Ventev's wireless infrastructure arm.

Then there's the matter of replacing lost business. AT&T, which had been TESSCO's largest customer, ended a contract with TESSCO last fiscal year for managing the resupply of its retail stores. TESSCO called the contract "high revenue, low margin" and said the split was in both companies' best interests.

As a result, its revenue in the April-to-June period fell 25 percent compared with a year earlier — but profits rose 2 percent.

Investors don't seem too worried. TESSCO's stock price hit $33 a share in July, an all-time high after adjusting for splits, and remains near that mark. That's up from about $20 a share a year earlier.

The way CEO Robert "Barney" Barnhill Jr. sees it, there's plenty of room to grow in an industry that's already seen tremendous expansion.

The number of wireless subscriber connections in the country more than doubled in the last decade, from 141 million in 2002 to 326 million last year, according to wireless industry trade group CTIA. Devices with subscriptions — from cellphones to tablets — now outnumber people, since so many users have more than one.

Wireless data traffic, meanwhile, rose 70 percent — just in the last year.

That's a business opportunity for companies like TESSCO that supply infrastructure products. More phones, and particularly more bandwidth-hogging smartphones, put pressure on wireless carriers to improve their networks. The industry's capital investment increased by $4.8 billion last year, CTIA said.

"That does create a really good situation for the suppliers, the people that make the hardware that is required to go into those networks to upgrade," said John Walls, CTIA's vice president of public affairs. "And it really augurs well for them in the future as well because this build-out is continuing across every major carrier. … Data traffic has increased exponentially and is showing no signs of slowing down."

Demand is a particular challenge in places that draw a crowd. TESSCO says it's assisted with wireless upgrades at hospitals, college campuses, large offices, casinos, malls and sporting venues, including M&T Bank Stadium in Baltimore.

TESSCO handled the logistics for the 10-month stadium project in 2011, delivering the products that Verizon Wireless contractors needed — including more than 1,000 antennas and nearly 470 miles of fiber-optic cable, enough to circle the Baltimore Beltway nine times.

The Ravens stadium was built in 1998. Like many of that vintage, it didn't have any special cell coverage, said Roy Sommerhof, the team's vice president of stadium operations. Fans and employees relied on area cellphone towers.

But as more people sitting in the 71,000 seats come with wireless devices and expect to, say, record video of kickoff and immediately post it to Facebook, towers alone don't cut it. Sommerhof said the upgrade has worked well, and now the team is thinking about building a public Wi-Fi system.

He can see why these projects are ongoing across the country. If he's sitting in a densely peopled place like an airport, he wants to be able to use his phone.

"I think it's being — I wouldn't say demanded — but I think it's almost expected," Sommerhof said.

Woodbine-based Mid Atlantic Contracting, the project's general contractor, has been a TESSCO customer since opening in 1995. Fred Chandler, Mid Atlantic's vice president, said the stadium upgrade was complex and he appreciated the way the company handled the logistics.

"When we took the project on, preseason and special events were already in the works," he said. "There was no extra space down there. So they needed to know how we were going to sequence the project and bring everything in at just the right time."

TESSCO started life as Towson Engineering Sales and Service Co., a manufacturers' representative founded by Barnhill's father in 1952. Barnhill bought it in 1975 and turned it into a "total source" distributor, a company where wireless-industry customers could get everything they needed. (At first, it was wireless as in two-way radio and citizens band radio.)

Barnhill said his experience as a manufacturers rep suggested that one-stop shopping would resonate with companies.

"I saw how costly it was for me as a rep, as well as for the customer, to have multiple credit applications, multiple purchase orders," he said.

TESSCO's early days as a distributor were tenuous, Barnhill said. He and his wife, Janet, accounted for two-fifths of the workforce. It wasn't long before they had to choose whether to sell their house to plow the money into the business or have Barnhill go get a job somewhere else.

"We made the decision to sell," he said.

That turned out to be a good move, even though it meant house-sitting for a year and a half — with a young child — until they had enough money to rent. In 1981, the company supplied cables and antennas for one of the country's first cellular test sites, located in the Baltimore-Washington area. More cell business followed.

TESSCO's manufacturers worried that cellphones were a fad, like CB radio. But Barnhill said he was a believer.

"I saw the opportunity of wireless communications," he said.

Companies have tried to acquire TESSCO since then, but so far Barnhill has resisted the call — to large investors' annoyance.

Discovery Group, a Chicago investment firm that was TESSCO's largest outside shareholder in 2010, went public with its frustrations that year after it said TESSCO didn't even respond to several suitors. Discovery later offered to buy the company itself for $15.50 a share — and got a chilly no-thanks.

"The Board of Directors concluded that the proposal is grossly inadequate," the company said in a 2010 securities filing.

Part of the company's appeal is that its business model isn't straight middle-man, even with the products it buys and resells. TESSCO says it can help customers design wireless systems, configure products such as antennas, put every part and tool required for the project in one box and ship it directly to the installation site.

Rein, walking through the company's bustling Hunt Valley distribution center, passes by a massive inventory that ranges from fuse kits to drills to tape measures.

It's one of two TESSCO distribution centers — the other is in Reno, Nev. — and it alone handles more than 4,000 orders each workday, with over 100,000 pieces of product and about 120,000 feet of cable between them. Work goes round the clock from Monday through Friday, with weekends reserved for catch-up if needed.

The company also handles early prototyping for Ventev in Hunt Valley — the actual manufacturing is done in Reno and through contractors based around the world. TESSCO says it looks for niches that don't directly compete with the products it sells that were made by other manufacturers, though that could range from unique technology to different packaging.

New Ventev products include a combination wall/car charger due out in October and a cellphone case that has a backup battery built in. Barnhill, stopping in at a recent presentation about the products at the company's headquarters, snagged one of the "Powercase" backups for his iPhone.

"I was starting to hyperventilate," he said. "I left my charger at home."

jhopkins@baltsun.com

twitter.com/jsmithhopkins

Copyright © 2014, The Baltimore Sun
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