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Commentary: A story we all should heed

February 11, 2008

Last month, Brightpoint Inc. Chairman and CEO Bob Laikin was honored with Indiana University's Distinguished Entrepreneurs-In-Residence Award. If the selection committee was looking for an executive with pluck, it chose well.

The IU Kelley School of Business hosts the Distinguished Entrepreneurs-In-Residence program to inspire students and help them learn about the challenges of starting or expanding an emerging business. Laikin's tumultuous and exciting journey left the students as dizzy as a day-long ride on the Kings Island Beast.

Laikin founded Brightpoint in 1989, when few people owned a cellular phone. I remember when the devices came on the market. A real estate executive phoned me from his car and remarked how convenient the phone was for making insignificant calls while driving to his next appointment. I got the point.

By 1994, the utility of the cell phone was proven. Like the black rotary home set of the 1930s, it passed from the category of "luxury" to "need." That year, Brightpoint went public with a market value of $30 million. By 1997, its market value was over $1 billion. Laikin was hailed as a rising star.

Laikin, a rabid entrepreneur, saw global opportunity and went on a spree. Mistakes were made. There was little time for due diligence and post-acquisition integration in the headlong quest to build sales and capture market share. By 2002, you could have-and should have-purchased the whole company for $10 million. Passing premature judgment, folks lambasted Laikin as a failed executive.

In its early years, Brightpoint had financed much of its growth through the issuance of $150 million of corporate bonds. In 2002, the bondholders, including Northwestern Mutual and Bank of America, were nervous. They believed the media hype that said Brightpoint was a candidate for bankruptcy and they were concerned their bonds would become worthless.

Laikin understood the Wall Street psyche of, "Cut your losses and take your money and run." A tough negotiator, he was particularly adept in this situation. He convinced the bondholders he would not give up his company and that if they did not surrender their investment at a discount, their bonds would end up on the bottom of the birdcage. The bondholders viewed Laikin as reckless-who could have blamed them?

Through a long and painful negotiation, Laikin was able to effect the purchase by Brightpoint of all the outstanding bonds at an average cost of 60 cents on the dollar, a savings of $60 million. All of a sudden, the company had value-again.

Laikin was determined to turn the company around. Recognizing the mistakes he had made, he crafted plans that contemplated continued growth but in a careful and organized manner. In 2003, the economy and wireless industry began to recover and Brightpoint, through focus on profitability, followed suit.

Brightpoint is now the world's largest player in the wireless distribution and customized logistic services business. In fact, it is dominant. It has presence in 25 countries and employs 3,300 full-time employees. Brightpoint expects to handle more than 100 million wireless devices on a global basis in 2008, more than four times its closest competitor. The market value of Brightpoint is again over $1 billion.

In 2007, the American Business Awards, dubbed the "business world's version of the Oscars" by the New York Post, were held in New York City. The American Business Awards are the only national, all-encompassing awards program honoring great performances in business. Laikin received the award for the best turnaround executive.

During the entrepreneurs-in-residence day at IU, Laikin had an opportunity to speak to a number of classes about the rise, the fall and the rise of Brightpoint. In the midst of charts and graphs, a central message emerged: "Be determined in what you believe in; never give up."

That's good advice for students and for us all.



Maurer is a shareholder in IBJ Media Corp., which owns Indianapolis Business Journal.To comment on this column, send e-mail to mmaurer@ibj.com.
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