Planar Systems, Inc.
Planar Systems, Inc.
1195 NW Compton Drive
Beaverton, Oregon 97006
Telephone: (503) 748-1100
Toll Free: (866) 475-2627
Fax: (503) 748-1541
Web site: http://www.planar.com
Sales: $251.9 million (2003)
Stock Exchanges: NASDAQ
Ticker Symbol: PLNR
NAIC: 334419 Other Electronic Component Manufacturing; 339112 Surgical & Medical Instrument Manufacturing; 541613 Marketing Consulting Services
Planar Systems, Inc. is a leading developer, manufacturer, and marketer of high-performance electronic display systems. Its products, which range from display components to standalone systems built for specific market applications, rely upon different technologies, including active matrix liquid crystal displays (LCDs), passive matrix LCDs, plasma display panels, and Planar's proprietary electroluminescent flat-panel displays. Planar has a diversified customer base in the medical, industrial control, test and measurement, avionics, and computer industries. Major operations also are located near Boston, Massachusetts, and Helsinki, Finland.
Early Pioneer and Leader in Electroluminescence in the 1980s
In 1983, Jim Hurd, a researcher and manager since 1980 of Tektronix's solid-state research laboratory at Oregon-based Tektronix, founded Planar Systems, Inc. Hurd was a native of Spokane, Washington, with a degree in physics from Lewis and Clark College in Portland, Oregon. He had gone to work for Tektronix in 1968 immediately after college and rose through its ranks to eventually head up a team working on electroluminescent flat-panel display manufacturing.
Along with Chris King and John Laney, Hurd raised $6 million and entered into a venture capital partnership with Tektronix that allowed Tektronix to protect its potential electroluminescent market while allowing the new spinoff to take on the risk of development and production of flat computer screens. The new company employed 14 former Tek employees and acquired the rights from Tektronix to the company's solidstate flat panel display technology. Planar Systems moved into the Oregon Graduate Center Science Park in Beaverton, Oregon, in late 1983 and began high-volume production at the site in February 1984. Tektronix remained a strong supporter of Planar throughout its early years, making some of its research facilities available to the new firm and holding a 31 percent interest in Planar.
Planar introduced its alternative to the boxy, cathode ray tube display screen, its flat (three-quarter-inch thick) monochrome computer screen in early 1984. Potential customers—computer, auto, medical, and military manufacturers—welcomed the flat panels as a replacement for the cathode ray tube, despite the fact that they cost significantly more, about $275, in the mid-1980s. Planar's amber-on-black monochrome screens were easier on the eye than the standard monochrome green, and the flat screen eliminated defocus or elongation of images in the corners. The company's higher-volume customers included Hewlett-Packard and Grid Systems Corporation, which produced a portable business computer. The new company's sales reached $12 million its second year.
At the time, three technologies were being explored in the flatpanel market—electroluminescence, liquid crystal display—both passive (light reflecting) and active (light emitting)—and plasma. All employed microprocessors called "drivers" that sprayed electrical impulses through or between thin panels that, when sandwiched together, formed the screen. In an LCD panel, the active ingredient was an organic liquid; in a gas plasma screen, argon or neon gas; in an electroluminescent screen, it was a metal film. Liquid crystal and plasma displays each took up about 40 percent of the market in the late 1980s, with electroluminescent displays at about 20 percent.
Notwithstanding its lesser percentage, electroluminescence was considered one of the more promising display technologies since its screen image could be read from nearly every angle and in any room light. Its main drawback was that it required almost six times the power of a backlit LCD screen and was thus more susceptible to burnout. Planar's electroluminescent screens, however, offered a 50 percent increase in brightness and a 30 percent reduction in the amount of power needed to drive them. Its screens were scrupulously tested for two days before being shipped to customers. While others were cautious, uncertain that electroluminescent technology would take off, Planar invested $20 million in German-made production line equipment over a period of 14 months in the mid-1980s, increasing capacity from 60,000 units a year to almost 500,000 and doubling its production line employees.
As fast growth became inevitable for Planar, founder Jim Hurd invested in a new manufacturing plant in 1986. Hurd's chief desire was to make Planar profitable in the short run, and in order to do so, he had to enable Planar to meet the needs of a bigger market than he, Chris King, and John Laney had ever dreamed of. "Our biggest single problem is product availability," he announced in a 1986 Portland Business Journal article. In 1988, Planar, which had been working with the army's Electronic Display and Devices Laboratory, broke new ground in the electroluminescent market when it introduced the first full-color, flat-panel display. By 1989, Planar shipped 25,000 units each year to 60 to 70 production customers, which it claimed represented 40 percent of the electroluminescent market. With production increasing 50 percent annually, Planar employed more than 130 people. It could not recruit enough highly trained people within Oregon, however.
Acquisition As a Strategy for Quelling Competition in the 1990s
Planar broke into the computer workstation market in 1990 when it began producing computer monitors for Digital Equipment Corporation (DEC). The year was a banner one for the company, marked by revenues of $25 million; a $1 million twoyear contract with the U.S. Defense Department that included Planar in the Defense Advanced Research Projects Agency and solidified its position at the cutting edge of the high-definition display market; and the acquisition of its major European competitor, the Finlux division of Lohja Corporation of Helsinki, Finland. The purchase of Finlux had many advantages: it doubled Planar's market share and sales and made it the largest company of its kind in the world. It increased Planar's production capacity. Finally, it gave Planar a strong presence in Europe and put it in a more competitive position with Japanese manufacturers, who had a lock on the color flat display market and were investing heavily in LCD technology.
The year 1991 also was marked by a bitter international trade dispute between domestic flat-panel display makers and the Japanese companies that were selling their products on the U.S. market. Hurd led a band of domestic manufacturers against the industry's free trade advocates, arguing that Japanese competitors were violating U.S. trade law by "dumping" their products at well below cost in U.S. markets.
Notwithstanding these challenges, Planar enjoyed another outstanding year in 1991. The company's sales reached an alltime high of about $55 million, and the Defense Department awarded it a $2.5 million grant to build a new manufacturing line after Planar introduced its first multicolor display screen midyear. The new screens offered red, yellow, green, and black, a big step forward from the former amber-on-black color scheme; lacking until 1993 was the color blue. Electroluminescence was then still the smallest, but fastest-growing of the three flat display technologies. The Department of Commerce awarded another $7.6 million federal contract to Planar, Tektronix, and eight other domestic makers of flat-panel displays in 1991 to conduct five years of research into advanced manufacturing of flat-panel displays.
It was not until 1992, however, that Planar finished a year in the black. Sales grew to $45.7 million with $6 million in profits, up from $38.1 million the year before. The company's workforce tallied close to 400. Despite its accumulated ten-year losses of $16.1 million, however, Planar maintained a strong balance sheet, and, in 1993, it held its initial public offering. That same year, Jim Hurd was chosen as the High Technology Executive of the Year of the Cascade Pacific Council of Boy Scouts of America, and the company, poised for growth, purchased its neighboring building in order to expand its manufacturing operations.
The expansion cost Planar more than $10 million beginning in 1994 and accommodated the company's need for a new manufacturing line for its full-color displays. Planar also branched out in another new direction in 1994, acquiring Tektronix's avionics display unit, and began to market small numbers of small active matrix LCDs to the military and avionics industry for use in cockpits. In 1996, it landed a contract with the government to design flat-panel military avionics displays, which it began shipping in 1999. In 1997, it expanded its customer base for active matrix displays to the consumer computer market, and the company went into full production of active matrix displays. This move came in response to the 1995 push by Asian flat-panel display rivals to penetrate U.S. industrial and medical markets and the burgeoning growth of the laptop computer market.
Planar purchased Standish Industries Inc. of Wisconsin, manufacturer of flat-panel LCDs, in 1997, taking Planar into yet another new area—that of low-cost, low-power passive LCDs used in gas pumps and cash registers. The acquisition made Planar the largest independent domestic merchant supplier of flat-panel displays. In 1998, it began marketing its newly developed high-brightness, high-contrast, monochrome electroluminescent displays for outdoor, off-highway emergency vehicles and launched a line of medical monitors.
We provide innovative solutions to connect people with information.
Revenues kept pace for a while with the company's growth. In 1996, revenues reached $80.4 million; in 1997, they were in the $90 million range. Then in 1999, with the global high-tech slowdown, sales began sinking, and the company experienced its first annual loss since 1993 on revenues of $123 million. Stock prices fell. Adding to the company's crisis, Hurd was diagnosed with leukemia. He underwent open-heart surgery before a scheduled bone marrow transplant and suffered a stroke. Bill Walker, Planar chairman, became interim chief as the company searched for a new leader. Balaji Krishnamurthy, a mathematician and computer scientist who had been head of Tektronix's Design, Service and Test Business Unit, became Planar's new president and chief executive officer in 1999, permanently replacing Hurd, who died in 2000.
Turnaround: 1999 Onward
Krishnamurthy inherited a company composed of near-autonomous divisions, each with separate procedures for accounting, procurement, and employee management. The company as a whole was characterized by operational inefficiencies and internal competition for business. Krishnamurthy sought to unify the company. He devoted his first quarter as chief executive to traveling to Planar's sites in Finland and Wisconsin where he held meetings with employees. The following quarter, he concentrated on focusing business units by market rather than geography and on discovering what customers needed.
The Krishnamurthy-led turnaround pushed Planar to evolve from a culture driven by engineering to one driven by marketing. Planar's new focus was fixed on its consumers rather than other manufacturers. In so doing, it left its roots as an electroluminescent manufacturer to offer finished display systems that could plug into a customer's product. Under Krishnamurthy, Planar realigned its operations, overhauled management, dropped unprofitable businesses, instituted a hiring freeze, and added new markets and technologies. It moved assembly production of its electroluminescent modules to Indonesia. It ended its six-year production of high-performance, full-color, active matrix LCD panels for military avionics and turned its attention to fast-growing commercial markets for flat display screens—medical equipment, truck instrumentation, and gas pumps. Krishnamurthy also instituted a policy of requiring executive ownership of stock beyond options and grants, wanting the company's top employees to put their own dollars into the business.
In 2000, Planar stepped further into the commercial realm and strengthened its foothold in medical monitors with an investment in Topvision Display Technologies Inc. of Taiwan, manufacturer of active matrix LCD flat-panel monitors. It also began offering desktop monitors to the commercial market via three direct retailers, TigerDirect.com, Dell Computer Corporation, and Egghead.com. "Getting into the desktop monitor business is a statement that we're excited about going after large, high-growth commercial markets," Krishnamurthy was quoted as saying in a 2001 Portland Business Journal article. By 2001, the company's consumer products were available from nine of the top computer equipment providers. Its income for 2000 was $4 million on revenues of $169 million, a significant increase over 1999.
An economic slump hit the tech sector in 2001, but Planar continued to grow and began construction on new corporate headquarters. Its profits reached $14.5 million on sales of $208 million. The company's revenues were now almost evenly divided among its three main markets: industrial, transportation, and medical. It acquired AllBrite, a leading manufacturer of flat-panel displays for ATMs and the outdoor kiosk market. In another new initiative, the company created its photonics division to leverage its proprietary Atomic Layer Deposition technology into a variety of components, such as thin-film optical filters for fiber optic telecom systems.
In 2002, Planar continued on the path of change. It got out of the photonics components business, which it had initiated in early 2001, in the face of the telecommunications downturn. It acquired Dome Imaging Systems, maker of high-end computer displays for medical x-ray and other diagnostic images as it expanded to reach the fast-growing, profitable market. When it moved into a new 72,000-square-foot office building, it looked forward to continuing to gain ground as the leading domestic supplier of flat-panel desktop monitors and to penetrating more deeply into healthcare markets.
- Jim Hurd, Chris King, and John Laney acquire electroluminescent rights from Tektronix and found Planar Systems.
- Planar introduces the first full-color, flat-panel display.
- The company holds its initial public offering.
- Planar acquires Tektronix's avionics display unit.
- Planar acquires Standish Industries, adding passive liquid crystal display (LCD) capability.
- Planar launches a line of medical monitors.
- Planar's Evergreen manufacturing facility opens in Hillsboro, Oregon; Bill Walker, Planar chairman, becomes interim chief executive, followed by Balaji Krishnamurthy, who becomes chief executive and president.
- Jim Hurd dies; company exits the active LCD business and partners with Truly Semiconductor.
- The company launches a line of Planar-branded commercial desktop monitors; AllBrite Technologies is acquired; Planar exits CRT technology production.
- Planar acquires DOME Imaging Systems; the company closes its passive LCD manufacturing facility in Wisconsin and consolidates manufacturing in its Finland facility.
Planar Systems Oy; Dome Imaging Systems, Inc.; Planar Taiwan LLC; Planar China LLC; Planar Systems GmbH; Planar Systems Limited; Planar Systems S.A.R.L.; Dome Imaging Systems N.V.
Hitachi, Ltd.; Matsushita Electric Industrial Co., Ltd.; Sharp Corporation; NEC Corporation; Sony Corporation.
Anderson, Julie, "Spinoff Pact Sign of New Trend," Portland Daily Journal of Commerce, June 7, 1983, p. 1.
Earnshaw, Aliza, "'It's Not Our Fault,'" Portland Business Journal, February 23, 2001, p. 17.
——, "Planar CEO Gets the Employees Pulling Together," Portland Business Journal, February 23, 2001, p. 15.
Jenning, Steve, "Planar Systems Launches Bold Bid for More Business," Oregonian, April 21, 1985, p. D1.
Manning, Jeff, "Acquisition Doubles Sales, Gives Planar Top Spot in Industry," Portland Business Journal, July 23, 1990, p. 21.
——, "Jim Hurd: Planar Exec Becomes Both Leader, Pariah Over Dumping Issue," Portland Business Journal, December 2, 1991, p. 10.
——, "Planar Takes Off with High-Definition Work," Portland Business Journal, February 12, 1990, p. 1.
Raths, David, "Winner, Company of the Year Larger Than $60 Million in Revenue: Planar Systems," Portland Business Journal, November 30, 2001, p. S13.
Robertson, Jack, "Planar Plans to Pump Out AM-LCDs," Electronic Buyers' News, January 27, 1997, p. 3.
Scannell, Tim, "Planar Punches Up Flat Panels with Enhanced, Full-Color EL Displays," Mini-Micro Systems, July 1988, p. 19.
Woodward, Steve, "Beaverton, Oregon-Based Flat Panel Display Maker Rebounds into Record Sales," Knight Ridder/Tribune Business News, October 31, 2000.