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Scope

ROGER YU Orange County Business Journal John Diebel, as a twentysomething engineer with an entrepreneurial itch in 1971, wandered the halls of the Los Angeles Central Library looking for business ideas that could free him from his day job at Hughes Aircraft Co. Flipping through magazines and journals, he collected leads and sent letters inquiring about opportunities. After months without a response, a letter finally arrived from a Japanese private-label telescope maker, Towa Optical Manufacturing Co. It agreed to let Diebel distribute “about 100 or 200 telescopes” in the U.S. from the kitchen of his Canoga Park bachelor pad. Today, 25 years later, Diebel heads what he has built into the world’s largest telescope maker Irvine-based Meade Instruments. It has annual sales of $60 million, more than half the total U.S. market share, and 18 percent of its products are exported. “They’re the Mercedes and Lexus of the industry,” says Jerry Fleming, an analyst at Sutro & Co. Meade’s sales for the fiscal year ended Feb. 28 were $59.9 million, up 27 percent from $47.2 million a year earlier, despite a 40 percent reduction in shipments to a significant market, Japan. Analysts are projecting Meade’s sales will hit $70 million this year. The company’s bottom line also has improved, with a net income of $3.4 million (52 cents a share) in fiscal 1998 vs. a net loss of $3.0 million (76 cents) in 1997. Analysts are projecting net income to approach $5 million this year. Wall Street has been generally positive toward the company. Meade debuted at $7 and was trading at just below $11 in mid-June. To attract larger investors and pump up the trading volume, Diebel is considering a secondary stock offering “maybe within a year.” To accommodate its growth, Meade moved last September from its old space to modern quarters three times as large a 161,000-square-foot building in Irvine with a built-in observatory. The new facility houses administrative offices and higher-end telescope manufacturing operations. Meade contracts with a Taiwanese manufacturer to produce its lower-end products. The new facility in Irvine will go a long way toward alleviating common retailer complaints of a chronic backlog of orders, caused primarily by the popular demand for Meade’s ETX Astro Telescope line. ETX, an ultra-portable 90mm telescope that Diebel invented and Meade released in mid-1996, was running a year-long backlog at one point. Diebel said that backlog has now been trimmed to about one month. “These are precision products,” Diebel said when asked about the backlog. “These are not doughnuts. And we don’t just turn the machine and make it go faster.” Meade’s growth spurt actually began in 1992, when it introduced the LX 200 model, which many experts believe revolutionized the amateur telescope market. LX 200 was the first affordable computer-controlled telescope. Its “go-to” function automatically locates the astronomical object and tracks it as it moves across the sky. Introduced at $1,995, the LX 200 was half the price of other commercially available, computer-controlled telescopes. With a database of 64,000 stars, nebulae, galaxies and other cosmic sights, “there is no object in the sky it can’t find,” Diebel says. The popularity of the eight-inch model (diameter of the main magnifying element) soon led to the 10-, 12- and 16-inch models. “That put us back on our feet,” said Diebel.

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