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Flashback: How to Do Tough Times

Mark Smith — who also founded Universal Data Systems, Huntsville’s first data communications company — won a high school science fair that got him a meeting with Wernher Von Braun and a job for three summers working for NASA in Huntsville and Cape Canaveral.

Mark Smith — who also founded Universal Data Systems, Huntsville’s first data communications company — won a high school science fair that got him a meeting with Wernher Von Braun and a job for three summers working for NASA in Huntsville and Cape Canaveral.

Legendary Alabama businessman Mark Smith talked with us in August 2003 in the “Executive Q&A” of our annual public companies issue. Founder of Huntsville-based Adtran Inc. and CEO at the time, he told us his strategy for working through the daunting high tech recession that began in 2001.

Adtran is a leading maker of Internet networking components, selling to phone companies and main line Internet providers. The company had revenues of $345.7 million in 2002, compared to 2012 revenues of $620.6 million.

“From the very top of the peak to the trough we saw about a 30 percent revenue decline, and we reacted to that with cost control measures,” said Smith. “However, what we basically did was look to the long-term and not the short-term. Therefore, although we had a reduction of 100 people out of 1,700 people, we refused to maintain cost control by removing employees, because they are a long-term investment. Instead, we reduced salaries for over 250 employees, and that helped maintain our experience base. We reinstated salaries at their original level last year.”

Smith also described his strategy for gaining market share by rapidly redesigning products. “What we do is continually re-engineer for reduced cost and improved performance,” he said. “Due to the technological advancements that are constantly occurring, the advantage of product lead is significant, and it becomes more logical to gain significant volume.”

As to the long-term demand for what his company sells, said Smith, “As time goes on, we all need more information and more data, and the need for speed and storage and computing power are the three things we have seen continue to grow. Speed is now the area that is lagging behind the other two capabilities, so we’re sort of at a bottleneck, and it’s a golden opportunity going forward, once things get back to normal again.”

Smith stepped down as CEO in 2005 owing to illness. He died in 2007.

On news that economic conditions in Europe were hurting its profitability for the second quarter of 2013, Adtran’s stock ticked down down $1.77, or 7 percent, to $23.44, but it was still trading near its 52-week high of 26.66 on July 11.

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