85.7 F
San Fernando
Thursday, Jan 26, 2023
-Advertisement-

Van Nuys Equipment Lessor Sees Shares Spark

When Electro Rent Corp. lost a major contract last month with one of the market’s biggest manufacturers, little did it know that replacement customers were not far behind. A contract between the Van Nuys leaser of electronic test and measurement equipment and Keysight Technologies Inc., in Santa Rosa, expired May 31. During the first three fiscal quarters of 2015, the Keysight contract gave Electro Rent about $52 million in revenue, or 29 percent of its total in that period, according to filings with the Securities and Exchange Commission. The day after announcing the lost contract on March 3, Electro Rent’s stock fell 22 percent to close at $9.77. But within two weeks, the company had signed two new deals with ART-Fi, in Orsay, France, and Anritsu Co., the U.S. subsidiary of Japanese firm Anritsu Corp. Electro Rent Chief Executive Dan Greenberg said that because the company no longer had an exclusive agreement with Keysight, it could pursue deals with other manufacturers. “It should give us more flexibility and also gives the manufacturers more flexibility,” Greenberg said. “The customers will get more choice.” Electro Rent, with about 400 employees, leases, rents and sells test and measurement equipment from an inventory valued at about $600 million. For example, the company rents oscilloscopes used by engineers to get a picture of an electrical signal, as well as spectrum analyzers for measuring radio signals. Since 2009, Electro Rent had been the sole reseller of new Keysight test and measurement equipment to small- and medium-sized businesses in the aerospace, defense, telecom, semiconductor and electronics manufacturing industries. Last year, however, Keysight was spun off from its parent, Agilent Technologies, as a separate company. That led to Keysight deciding to not renew its contract with Electro Rent as it wanted to have more control over sales and customers, Greenberg said. “It had nothing to do with the quality of work we were performing,” he added. The new contracts will only partially replace the revenue lost from the Keysight deal, but Greenberg declined to provide exact figures. “We don’t expect this activity in the beginning to match what we did with Keysight at all,” he said. The underlying market for Electro Rent remains strong, according to Martin Rowe, senior technical editor of the website Test and Measurement Design Center, an online community for engineers. He said the proliferation of wireless devices and the emerging “Internet of Things,” or the wireless connection between devices in both industrial and consumer applications, requires testing. “That is going to drive more sales of test equipment,” Rowe said. In fact, with the announcement of the new deals, Electro Rent stock has gained back much of its loss from the Keysight non-renewal. The stock closed June 24 at $11.35. Greenberg would not disclose how much specific Electro Rent products rent or sell for, but new high-end machines sell for as much as $100,000 to $200,000. “Most of it is going to be at a lower range,” he added. The price of equipment from the new manufacturers will be similar to what the Keysight product sold for, Greenberg added.

Mark Madler
Mark Madler
Mark R. Madler covers aviation & aerospace, manufacturing, technology, automotive & transportation, media & entertainment and the Antelope Valley. He joined the company in February 2006. Madler previously worked as a reporter for the Burbank Leader. Before that, he was a reporter for the City News Bureau of Chicago and several daily newspapers in the suburban Chicago area. He has a bachelor’s of science degree in journalism from the University of Illinois, Urbana-Champaign.
-Advertisement-

Featured Articles

-Advertisement-
-Advertisement-

Related Articles

-Advertisement-
-Advertisement-