Sustainable Growth

Commercial Data Systems’ triple-digit percentage sales increases are over, for now.

August, 2002

When Commercial Data Systems Inc. broke into the Top 250 for the first time last year at No. 161, it was after three consecutive years of triple-digit percentage sales increases. According to President and Chief Executive Officer Mark Wong, dot-com customers fueled the growth explosion in his Internet-support company, which specializes in Unix. Wong says he prudently never budgeted to reflect the dot-com revenue because he knew it wouldn’t last. “Anybody that really knew the market knew that this bubble was going to burst, it was just a question of when,” says Wong.

Burst it did, but when it did, Commercial Data Systems had already gone about diversifying its customer base into the military and government. “If we hadn’t done that, obviously we’d be in far worse shape than we are today,” says Wong. “The commercial business just cratered after the dot-com bust.”

Wong says the drop in that business sector was further exacerbated when the tech companies dumped all the new or barely used equipment they had acquired on what he calls the “grey market” for a fraction of the equipment’s value – meaning less than what even Commercial Data Systems could buy it for.

This year Commercial Data Systems Inc. drops to No. 195. Gross sales plunged by 37.7 percent, from $44 million in 2000 to $27.4 million in 2001. But Wong says, largely because of the federal government business the company has picked up, he thinks Commercial Data Systems will be back in the $44 million range next year. Shortly after 9-11, the federal government business increased with the beefing up of intelligence and security. Before last year, there were hardly any sales made outside of Hawaii. Last year, 70 percent of the company’s business was outside of the state and Wong expects that to grow to more than 90 percent this year.

Wong says the most important thing is that the business is profitable. He always cautions against using gross sales as a measure. “It’s a good measure. It tells something about how a company is doing. But there are lots of companies that get a lot of revenue that are not managed well and they’re not profitable. So to me, profitability is far more important and profitability boils down to efficiency.”

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Kelli Abe Trifonovitch