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Memorex Is Optimistic About Digital Future

Take one American blank tape icon (Memorex, Is it live or is it...), add a few seasoned executives, a few new product categories, stir well in a bubbling market mix, and you have a recipe for success in today's converging A/V and computer marketplace.

That's the approach taken by Memtek Products of Santa Fe Springs, Calif., over the past two years, and the company is now on a growth path that it sees escalating and continuing into the new millennium.

Mike Golacinski, recently promoted to president/chief operating officer, and Steve Johnson, VP of marketing for media, are two of the forces behind the new path for Memorex.

"We have been in the process of restructuring the company for the past 24 months," said Golacinski. "We have firmly reestablished the brand name in the U.S. and have repositioned the company to be both consumer electronic and computer product supplier."

In addition to traditional audio and video tape, Memorex now offers computer media, computer peripherals and computer accessories, all under the Memorex brand name.

"Well over 50% of our revenue will come from the computer side of the business this year," said Golacinski, adding that the company has been focusing on retail distribution. "Today we are in 83% of the top 25 retailers with at least one of our categories."

While the Memorex brand itself is about 30 years old, the Memorex Products Group came into being when Memorex spun off its tape division and sold it to Tandy in 1982. Eleven years later, in 1993, Tandy sold it to Hong Kong investment firm Hanny Holding.

This parent company has gone through several transitions, said Golacinski, explaining that two years ago, it decided to focus on the Memorex brand and revitalize the company in the U.S. That's when he and Johnson were brought on board.

Golacinski, an industry veteran formerly with Maxell, brought on a team of industry veterans. Johnson came from Sony, and other new additions include marketing VP for computer peripherals Lisa Pia Byers, who came from Iomega, and marketing VP for computer accessories Scott Stroup, formerly of Allsop.

"The key is that all products are under the Memorex name," said Johnson. "The corporate name is Memtek, but we have now bought the worldwide rights for the Memorex name."

"We want the retailer to see that we appeal to a broader range of customers," he said, noting that Memorex appeals to younger, more technically advanced consumers with its new computer peripherals, accessories and media, as well as to the traditional audio/video consumer.

"We are positioning ourself as a total multimedia supplier," Johnson noted. "We offer a total multimedia solution under the Memorex name. You can buy CD-ROM drives, keyboards, blank media -- all under one brand name."

In audio, for example, Golacinski noted that the traditional analog tape business declined 5% last year and that the consumer has become used to digital. "Forty to 50% of the space that retailers used to give to audio tape is now going to MiniDisc and CD. This is an opportunity for us," he added. "We introduced product last year and established our position early."

Memorex's blank media line for audio includes not only MiniDisc, but also CD-R-DA and CD-RW-DA for the emerging home digital recording market, termed Music CD-R by Johnson.

And in video, the company is featuring longer lengths such as its T-200 10-hour tape and also sees DVD-ROM beginning to establish itself.

On the computer side, for CD-R and CD-RW, said Golacinski, "with drives at $200 and starting to be included in PCs, you will see the entire CD-R category continue to explode."

He noted that worldwide forecasts for CD-R sales were estimated at 300 million units last year, but in fact, over 600 million units were sold in 1998. "We see that same rate of growth, even higher, this year."

While CD-R and CD-RW are "exploding," Johnson noted that Music CD-R still tends to confuse people. However, sales of the Philips home audio CD recorder have exceeded expectations, he said, "which is breathing new life into traditional consumer electronics and opens the opportunity to make music CDs at home without the use of a PC. The business is only six months old and is growing in leaps and bounds, and we have been involved from the beginning."

"At the same time," Johnson added, "Sony is spending a fortune to carve out a niche for MiniDisc. Both digital formats have a place and will replace traditional audio tape, at least for the music enthusiast.

"It's a whole new world. Although Memorex lost position in premium high-end audio tape, we are excited about our position and growth in the audio format."

Also growing are accessories and peripherals, including higher-speed CD-ROM drives and rewritable drives, keyboards and mice, Golacinski said. "We are a player in all of those categories, and we have the benefit of being at the forefront of the growth categories."

Another robust area is rewritable CD drives, where the company boasts the number two market position, Johnson said. Memorex offers three models ranging from $199 to $399.

"Now that pricing has come down and consumers are able to easily record and make their own CDs, this has been an extremely strong area. CD is one of the most natural evolutions to take over from floppy disks and other removable media," he noted.

Rounding out its CD recording lineup is a $39.99 CD label-maker kit.

"To summarize, we are seeing the transformation from analog to digital in all aspects of the business, TV, home audio, computers," said Golacinski. "There is the opportunity to replace the entire installed base of consumer electronics devices in the next four to five years.

"This year for the first time, we are seeing the excitement and energy we saw in the late '70s and '80s. It is a tremendously exciting time to be in the business."

"We have overhauled our company and reorganized to be able to compete efficiently in the year 2000 and beyond," Golacinski continued. "The business models of the '80s and '90s have changed. There are fewer retailers, and the advent of the Internet has changed things. You have to be able to meet retailers' needs in a different way than you did five years ago. We are extremely well positioned for the new century."

Memorex Brand Hits Hardware

While Memtek is building the Memorex brand in blank media and computer peripherals and accessories, another, separate company -- Memcorp of Hialeah, Fla. -- offers Memorex-branded consumer electronics hardware such as MiniDisc players, portable CDs, radios, TVs, VCRs and telephones.

Memcorp is the exclusive distributor of Memorex consumer electronics hardware.n

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