When Anthony Bermingham took over as managing director at Lake Communications in 1993, the company had an annual turnover of £6 million. This year that figure reached £24 million and the company expects to float on the Dublin DCM and London AIM markets by the end of next year.
Lake specialises in providing technology solutions to the telecommunications sector, chiefly in the area of voice and data communications.
The company was established in 1977 and Mr Bermingham joined as technical director the following year. At that time it was one of the first Irish companies producing telecommunications products. Swiss company, Landys & Gyr, which develops payphones, bought out the Irish-owned company in 1988. Three years later, Lake was bought back from Landys & Gyr in a management buyout.
"At the time we had lost our way in international markets, so we had to have a strategic review which involved making changes in personnel and restructuring the business. We could see analogue was going to be replaced by ISDN, and this had to be addressed by the company," says Mr Bermingham.
ISDN (Integrated Services Digital Network) is digital technology which provides higher bandwidth communications. Now the company supplies ISDN compatible voice products, largely to the small business sector, to meet their network requirements.
The range of PBX (private branch exchange) and key telephone systems is distributed in Ireland through Telecom, and in Europe through established telecoms channels: British Telecom, Telecom Italia, Belgacom, Dutch PTT and Norwegian PTT. Trade outside Ireland accounts for about 70 per cent of Lake's business.
Within Ireland, the company - in conjunction with Cabletron - provides network construction for businesses, and products including Landis & Gyr payphones and Nokia modems.
This is the "bread-and-butter" end of the business, according to Mr Bermingham. The international business requires substantial investment in research and development as Lake gradually moves from a hardware to a software concentration.
"ISDN is limited in that it can't handle video, and with fibre optics so expensive, an alternative now has to be introduced. Asymmetric Digital Subscriber Loop (ASDL) is a possibility as it can send high bandwidth data over existing copper wires. We are currently involved in research to see how we can develop this area," says Mr Bermingham.
Lake employs 110 people at its premises in Beech House, Tallaght. Most are highly-skilled engineers and technicians, with 30 people involved in R&D. This year the company spent £2 million on research and development, approximately 10 per cent of international turnover. The manufacturing process is contracted out to MSL in Athlone and SCI in Fermoy.
The skills shortage is already presenting Lake with a big problem. The last three people employed in the R&D section were Eastern European, because the company could not find people locally.
"We are hampered by the skills shortage, it is very much an immediate problem. The only way this company can grow is through knowledge and when you have to start importing that knowledge or technology you know there's something seriously wrong," says Mr Bermingham.
Late last year, Lake bought Cornel Electronics which is one of the pioneers in the wide area networking (WAN) business. This has now been integrated with Lake's data communications division, particularly the PBX telephone systems. Cornel's data communications technology is being used to develop software which is integrated into network access products by datacommunications manufacturers.
Lake's competition includes Panasonic, Nortel and Siemens, though Mr Bermingham points out that they are competing on different levels, with the big players fighting for the business of multinationals and large installations. Lake focuses solely on the small business sector.
The company has no plans to expand into global markets in the near future and its focus will remain in Europe. A global partnership would be an attractive prospect but Mr Bermingham does not feel it is imperative that it should happen right away.
"There's always the risk of spreading ourselves too thinly for the sake of it. The European markets are very attractive, and we would be cautious about protecting our stake," says Mr Bermingham.
The flotation next year will provide the capital injection necessary to enable growth to continue at 20 per cent per annum. R&D is becoming increasingly expensive for the company, and there is a possibility that Lake may investigate buying in technologies, rather than developing them in-house, which is often more cost effective.
