Bogen Communications International, Inc. History

Company Perspectives:

What's our secret? It's not a secret, it's focus. Focus on our customer's needs! Focused salespeople, focused customer service and technical support reps, focused research and development engineers, focused production and manufacturing teams--all dedicated to improving and changing our products, support, and service to meet the changing needs of customers. This is why Bogen is the industry leader of communications equipment and technology used in offices, commercial establishments, and schools.

Key Dates:

1932:

David Bogen & Co. Inc. is founded in New York.

1956:

Bogen is acquired by Unitronics and facilities move to New Jersey.

1962:

Bogen becomes a subsidiary of Lear-Siegler.

1991:

Bogen Corporation introduces its Telco product line.

1993:

A new holding company for Bogen Corporation and a majority share in Speech Design GmbH is formed and goes public.

1998:

Bogen Communications acquires full ownership of Speech Design GmbH.

Company History:

With headquarters in New Jersey, Bogen Communications International, Inc., develops, manufactures, and markets telecommunications and audio products for offices, businesses, and schools. The company's product line includes amplifiers, speakers, background music equipment, sound processing equipment. Its European operations (through Speech Design GmbH, a German company with subsidiaries in Switzerland and Israel) develop, manufacture, and distribute voicemail systems as well as unified messaging digital voice-processing systems. Through these operations, in fact, Bogen holds a leading position in European telephony markets; in the United States, these product lines have gained a significant market share in the school intercom, signaling, and media-control segments.

Early History

Little has been published on the history of Bogen, making it a challenge to trace. The company was founded as David Bogen & Company in 1932 in New York by David Bogen, a pioneer in the burgeoning field of audio transmission. Among the company's first products were simple intercom systems and sound amplifiers.

By the early 1950s, the company had become well-known as a supplier of amplifiers and public address systems for schools. In 1956, Bogen was acquired by the Unitronics Corporation, a Long Island, New York-based leader in sound recording. During this time, Unitronics also bought the Presto Recording Corporation, opting to combine its new acquisitions as one division christened Bogen-Presto. From new adjacent facilities in Paramus, New Jersey, Bogen and Presto maintained their corporate autonomy but collaborated in order to tap each other's expertise. Presto was known primarily as the inventor of "the record", the black-lacquered recording disc, but the company also developed recording equipment such as turntables and amplifiers. For its part, Bogen and its engineering staff were pioneers in new amplifier and loudspeaker technologies. Assistant Chief Engineer Charles A. Wilkens explored "damping" effects on amplifiers, publishing widely on the subject, while colleague Herbert W. Sullivan received a patent on behalf of David Bogen & Co. in 1957 for his loudspeaker designs.

In 1957 Unitronics was acquired by Siegler Corporation, as the latter embarked on a rapid expansion program, acquiring numerous electronics-related companies. Five years later, Siegler merged with aerospace electronics manufacturer Lear to become Lear Siegler Inc.(LSI). Thereafter, the Presto name was dropped, and Bogen became known as LSI's Bogen Communications division.

LSI was involved in contract work for the U.S. military, and Bogen's technologies found a niche in that market. The company also continued to be well known for its amplifiers, particular the Challenger model. By the early 1970s, however, LSI had begun to falter under the weight of its numerous acquisitions, and new management began divesting noncore components. Bogen remained an LSI division, however, until 1987, when Memory Protection Devices Inc., merged with Bogen, paying LSI a reported $9.2 million in cash to assume Bogen's assets and liabilities. By 1991, Bogen had separated from Memory Protection Devices, the founders of which repurchased the company and relocated it to Farmingdale, New York. Bogen, meanwhile, was based in Ramsey, in northern New Jersey.

1990s: Focus on Product Development

In 1991, Bogen introduced the Telco product line, its first line of telecommunications peripherals. The first product was the MMT, a digital announcer with automatic microprocessor-controlled tape download for "on-hold" applications. The following year, Bogen introduced various other products in the digital telephone peripherals area, including the Automated Attendant and the Digital Announcer. These products were used in message/music on-hold and voice mail systems. During 1993, Bogen marketed its Office Automated Systems (OAS) to the retail and end-user markets. However, Bogen met with intense competition on several fronts: answering-service companies; local telephone companies, which offered central-voice mail services; and products with better brand-name recognition selling at lower retail prices. Bogen was forced to phase out OAS and concentrate on expansion of its traditional commercial and institutional customer base.

During this time, a German telecom equipment manufacturer called Speech Design GmbH was engaged primarily in selling peripherals equipment for cellular telephones used within an analog network. With the advent of the European GSM digital standard and the falling prices of ancillary subscriber equipment, Speech Design's management refocused its activities from the cellular market to the telephone peripherals market, and in 1992 introduced products for digital-telephone peripherals. "Friday The Personal/Office Receptionist" offered a competitive edge to small businesses, home offices, and such professionals as painters, roofers, plumbers, electricians, who worked away from their offices. Friday, an efficient version of the voice-mail system used by large corporations, could forward calls, route them to fax machines or computers, alert users to urgent messages, remind them of appointments, provide music-on-hold, as well as manage and screen calls.

In 1995, Bogen and Speech Design came together under a newly organized holding company, first registered in Delaware in 1993 as European Gateway Acquisition Corporation. The holding company acquired a 99 percent interest in Bogen and a 67 percent interest in Speech Design, and then made a public offering of 1.55 million shares, raising $8.12 million in net proceeds. The holding company was christened Bogen Communications International Inc. Speech Design's co-founders, Kasimir Arciszewski and Hans Meiler, retained managerial roles at Speech Design, eventually becoming directors at Bogen Communications.

Bogen's primary focus then shifted to long-term growth. In order to establish an international market presence, Speech Design signed distribution contracts with partners in ten European countries and gained approval in most major markets. This move constituted a coup against significant market-entry barriers to non-European and small European companies.

During the summer of 1996 a manufacturing subsidiary, Speech Design (Israel) Ltd., was opened in Israel to produce some of Speech Design's product line, thereby reducing manufacturing costs and taxes. In 2002, about 45 percent of all units manufactured by Speech Design were produced in the Israel factory.

In 1997, Bogen named Michael P. Fleischer president of the company. Fleischer, a graduate of Harvard's business school, came to Bogen from Ecko/Glaco Ltd. That year, Bogen acquired substantially all the net assets of New England Audio Resources, Inc. (NEAR), a leading manufacturer of high performance, all-environment speakers. NEAR became part of the company's Commercial Sound unit and its products were marketed with Bogen's product lines. During 1997 the company found new innovative solutions for the Telco paging market by developing the pro-Hold DRDX, a digitally produced, remote-downloadable MOH system. The Research and Development Department also developed a call-completion system that incorporated paging, voice messaging, and wireless messaging into one integrated system, the APS 2000.

The following year, Bogen Communications acquired the remaining equity interest in Speech Design, which immediately acquired all of Carrier Systems, located in northern Germany. Carrier Systems developed and manufactured LANs (local area networks) and Internet-based unified messaging products. In 1999 a newly formed Bogen subsidiary--Apogee Sound International LLC--acquired practically all the assets of Petaluma, California-based Apogee Sound Inc.

In the United States, Bogen Corporation developed, manufactured, and distributed commercial telecommunications and audio products and its two major subsidiaries: Bogen Communications, Inc., and Apogee Sound International LLC (Apogee). Although the majority of Bogen's sales were made through U.S. distributors, dealers, and contractors, the company also sold its products in Canada through a stocking representative with offices throughout that country.

Among Bogen's audio products were audio amplifiers and speakers as well as related sound and intercom systems equipment for professional, industrial, and commercial system applications. Other equipment was available for telephone paging systems and for background and foreground music applications. The company also marketed intercom and communications systems for the security and educational markets as well as a line of high-performance, all-environment speakers.

The company's Telco products, namely telephone-based paging systems and equipment and digital message/music-on-hold players, allowed installers to increase the value of their telephone systems by providing users with greater efficiency and convenience. For the 2000-02 fiscal years, Telco's net sales provided approximately 25 percent of the company's net sales. Some 100 distributors who operated 200 telecommunications distribution centers sold Telco products to thousands of telecommunications installers ("interconnects" or dealers) throughout North America.

The Commercial Audio product line included amplifiers, speakers, microphones, intercom systems and other sound equipment used in industrial public address systems, and background music in offices, restaurants, hotels, and stores. In 2002, Bogen introduced its new Power Vector modular amplifier series improved by the addition of higher-power and unique plug-in modules.

Apogee's pro audio product line consisted of speakers and speaker systems, amplifiers, processors, and system-balancing equipment for entertainment sound systems. Bogen's Engineered Systems featured custom-assembled, microprocessor-based intercom/paging.

Speech Design International, Inc. (SDI)--a Bogen subsidiary located in Germering (outside Munich), Germany; Wedel, Germany; Richterswil, Switzerland; and Kfar Saba, Israel--developed, manufactured, and marketed voice-mail systems, automated attendants, digital announcers, message-on-hold (MOH) systems and Unified Messaging (UMS) products and services. UMS products and services were part of the Telco product line.

Speech Design's Corporate Voice Processing ("CVP") line of business focused on digital-voice processing systems for mid-sized Private Branch Exchanges ("PABX") and was aimed at the European voice-processing market. With the late1995 launch of a product family called "Memo," Speech Design added innovative non-PC based voice mail systems to its existing line of telecommunication peripheral products: voice-mail, automated attendants, digital announcers, and message/MOH systems. In late 1998, Speech Design marketed the Teleserver Pro range of modular, higher-end (2-8 ports) voice and call-processing peripherals. Equipped with a higher capacity voice-mail than possible with Memo, Teleserver also offered LAN connectivity to PC networks and ACD (automatic call distribution). In 2000 and 2001, Speech Design ported the functions of its standard voicemail product on a single electronic board that thus became a major customer's PABX. In late 2002, the Teleserver family added MobilePro, thereby integrating mobile workers' cellular telephones with their office PABX.

In 1999, Speech Design added Unified Messaging products services to its flagship Thor (TM) series. This series improved communications within any enterprise and delivered value-added services to Internet Service Providers (ISPs) as well as to mobile and fixed-line network operators (carriers). Thor also could integrate fax and voice-mail into an existing e-mail environment, and integrate e-mail and fax into the mobile-phone environment.

The European voice-processing market for commercial and industrial end-users was the general market to which Speech Design offered its PABX products through leading European manufacturers. Most German clients were mid-size companies (50-200 employees) or major independent dealers outside Germany. Speech Design considered its sales network in Germany--Europe's largest telecommunication market--to be one of its best assets and a market-entry barrier to potential competitors. From 2001 and through 2003, several major international carriers implemented voice-mail platforms based on Thor's universal architecture: Deutsche Telekom, Europe's largest telephone company; TDC (formerly TeleDanmark), Denmark's leading telephone company; international operator Vodacom in South Africa; and the largest French wireless operator, Orange France.

2002 and Beyond

During 2002, Bogen introduced still more products, including the Power Vector (PV) family of modular input amplifiers adaptable for all Bogen divisions but aimed primarily at the commercial audio customer. This product line consisted of five amplifier power levels from 35 watts to 250 watts and 11 different input modules which could be installed into any of the eight input channels of the amplifiers. The PV amplifier models also could accommodate any of three specialized plug-in modules to eliminate expensive external-signal processing equipment.

In February 2002, Apogee finished development of a new high-powered amplifier, the CA-8000, also designed for fixed application. In April 2002, Bogen announced a new line of NEAR ceiling speakers--known as Orbit products and designed to satisfy the needs of higher-end business application of music for hospitality, restaurants, and retail stores. NEAR's ceiling speakers had a full-range pendant speaker for open space applications, a powered compact subwoofer, and a compact satellite speaker. Bogen began production of two members--the ceiling and pendant speakers--of the four-line concept family in preparation for sales in early 2003. The speakers used NEAR metal alloy cones and patented magnetic liquid suspension (MLS) technology that provided highly linear and accurate speaker response and superior speaker cooling for higher-power speakers. Both the Power Vector amplifier series mentioned above and the NEAR speakers were targeted to the medium/large segment of systems-contractors.

The company introduced its VHub teleconferencing device in late 2002 as another product of the Telco line. Over and above providing high quality and full duplex operation, the VHub had a LCD display and a 10-number speed dial. In February 2002 Vodacom, operator of the South African Cellular network, chose Speech Design Carrier Systems' Thor solution and Compaq Global Services to deliver mobile SMS to any traditional, fixed-line telephone; Thor software on Compaq's Telco servers called the fixed-line number and used text-to-speech technology to read the message.

By the end of fiscal 2002, Bogen Communications International, Inc. had survived almost two years of turbulence in the industries in which it competed, according to Bogen President and Chief Executive Officer Jonathan Guss. "2002 proved to be a pivotal year for Bogen," he stated in the company's Annual Report. However, "despite the general recession, sales increased over [those of] 2001, while costs were kept under tight control." He added that through a self-tender offer, 4.2 million shares of Bogen stock were bought back during the third quarter of 2002 and a major part of the cash borrowed to facilitate the tender offer was repaid. Demand for United States-based products began to recover but Speech Design's voicemail business continued "to suffer from the malaise affecting the European telecommunications sector."

On November 10, 2003, the Bogen Corporation announced the beginning of a tender offer for two million shares of its common stock at a price per share of $5.00. The purpose was to offer liquidity to stockholders who wanted to exit at a fair price and to create value for the stockholders who chose to keep their shares in Bogen. During a conference call, the company said that following the buyback (its third in three years), it would deregister and delist from NASDAQ. Bogen common stock would then cease to be quoted on the NASDAQ or the OTC Bulletin Board and probably be quoted only on the "pink sheets." This step reflected the hard fact that for Bogen, as for many other small companies, the advantages of NASDAQ registration were outweighed by the costs and the administrative burden.

Bogen continued to keep a very open eye on costs and tight control on overhead spending. During the third quarter, revenue increased in every domestic business, compared to the comparable quarter of the preceding year; there were improvements in the OEM business but, unfortunately, new products took a long time to penetrate the market. Engineered Systems revenues were up just slightly, compared to the those of the 2002 third quarter; a probable indication that state and local government spending was slightly loosening up.

In Europe, the telecommunications-equipment markets served by Speech Design were still depressed; both of the company's business lines,--corporate voice processing and Carrier Unified Messaging--reported a weak third quarter. However, taking into account some large orders scheduled for fourth-quarter delivery, Speech Design hoped for major revenue improvement in the last quarter. Another source of hope was that Speech Design had established new relationships and installations with seven major carriers in six countries, including Deutsche Telecom, its flagship customer.

With new products, restructuring according to technological advances, and an established and efficient cost structure, Bogen was well positioned for profit--if 2003 business and economic conditions continued to improve, and if product revenues continued to increase.

Principal Subsidiaries: Apogee Sound International LLC; Bogen Communications (Barbados), Ltd.; Bogen Communications, Inc.; Bogen Communications LLC; Satelco AG (Germany); Speech Design (Israel) Ltd.; Speech Design Carrier Systems GmbH (Germany); Speech Design GmbH (Germany); Speech Design International, Inc.; Thor USA.

Principal Competitors: ADC Telecommunications, Inc.; Avaya Inc.; Cycos AG; Gores Technology Group; Nortel Networks Corporation; Polycom Inc.

Further Reading:

• "Apogee Sound Purchased by Bogen Communications," Entertainment Design, November 1999, p. 23.
• "Bogen Communications International Inc. Buys Back Shares," New York Times, June 25, 2002, p. C4.
• "Bogen Communications International Inc.," Wall Street Journal, January 19, 1996, p. B2.
• Eng, Paul M., "An Electronic Receptionist for the Home Office," Business Week, May 24, 1993, p. 13.
• "Geotek to Sell Its Bogen Communications Stake," New York Times, November 8, 1997, p. B3.
• Laderman, Jeffrey M, "Big Noise on the Continent," Business Week, May 22, 2000, p. 181.
• "TGIF," Popular Mechanics, June 1994, pp. 54-6.

Source: International Directory of Company Histories, Vol.62. St. James Press, 2004.

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