Cobra Electronics CEO Speaks About His Company

Jan.28.08 | About: Cobra Electronics (COBR)

On January 28, The Wall Street Transcript interviewed Jim Bazet, President and Chief Executive Officer of Cobra Electronics Corporation (NASDAQ:COBR). Key excerpts follow:

TWST: Please begin with a brief historical sketch of the company and a picture of the things you are doing now.

Mr. Bazet: Cobra Electronics is a publicly held company that is about 45 years old. It got its start in CB radios and grew its business from CB radios to include other categories such as two-way radios, or walkie-talkies as they are known, and radar detection. At one time, we were in the cordless phone business. We also have a presence today in mobile navigation and a presence in a variety of accessory categories. In addition to that, the company has grown from a smaller company handling primarily CB radios to a global company with operations in Dublin, Ireland and Hong Kong. Hong Kong takes cares of purchasing and sourcing, while Dublin focuses on European sales. Just recently, we acquired a company in the red light speed camera locator business as well as satellite navigation business, called Performance Products. PPL is in Manchester, England. That brings you up to date on where we are today versus where we have been. The company has grown in scale from the $80 million range, 10 years ago to $160 million today. It is traded on the NASDAQ stock exchange under COBR. We employ approximately 150 people here in the United States in Chicago, Illinois, where we have marketing, sales, administration and engineering. We also employ approximately 12 people in our Hong Kong office. We employ four people in Dublin, Ireland, at our Cobra Electronics Europe Limited office, and about 25 people at Performance Products. Cobra has won several awards over the years. Within the last six years we have been named twice by Forbes magazine as one of the best 200 small companies in America. The founder and myself were named as entrepreneurs of the year in 2002. We have continually won innovation awards from the Consumer Electronics Association for design and innovation. We are a growing brand in 50,000 storefronts in the United States and 10,000 storefronts in Europe, with a variety of product categories including, marine.

TWST: You mentioned that you were innovative. Would you give us an example of that?

Mr. Bazet: Certainly we have done quite a few things over time. We were the first to implement many new and different types of technology into our products. For example, in the CB radio business, we invented and introduced a technology called Sound Tracker that allows the trucker to turn the radio's volume down without burdening the incoming signal strength, giving the user a quieter experience. We also invented what is called Night Watch Technology, which is a face plate that we put on the radio's front that dims the lights and allows the trucker to better see at night. In the radar detection area, we were the first to have a radar detector that actually talked to you. We were the first to have 360-degree detection in a radar detector. In the two-way radio business, we were the first to have snap on fronts, where you could have your college, different colors, wood grain, chrome or whatever you chose on the front of the radios. We were the first to incorporate vibration alert into the radios, for either highly noisy or desired quiet environments. Also, in the area of radar detection, we were the first to come out with a stealth radar detector, which is basically wireless and has the ability to detect speed and red light cameras via GPS. That is one of our latest products that we have added in this category. It is an award-winning product. In mobile navigation, we were the first to come out with real time traffic in a mobile navigation unit. Right now, we have the brightest screen in the industry. We were the first incorporate a feature known as My Favorite Brands, which allows you put together a personal folder of favorite national brands in your mobile navigation device. We have included over 650 national brands, and you can select which brands best fit your needs. For example, if you like to stay at Hilton Hotels, Hilton is one of the companies listed in My Favorite Brands. You can make it one of your favorite brands and you can pick a Hilton Hotel anytime or anywhere and it will take you to the closest Hilton Hotel. Those are just a few.

TWST: What are the main opportunities that lie ahead? What can we expect from you in the future?

Mr. Bazet: There are a lot of opportunities for Cobra. Right now, what we have started to work in is the area of red light and speed camera detection. Included in this database is what we call black spot and school zone location. What we do in our mobile navigation products and in our two high end radar detectors is to incorporate GPS related, location-based technology that will warn the consumer via a downloaded database as they approach an intersection as to the existence of a red light camera at that intersection, or on the highway that there is a speed camera.

Moreover, we are putting safety into these types of products, because we are also adding to our database what we are calling black spots. Black spots are intersections where there is either a high degree of accidents or fatalities, or the intersection itself is designed so that it is not visibly a safe intersection. We warn the consumer of these black spots. Add to that, school zones and work zones, and we develop and design products that make the consumer much safer. There is a lot of information that the soccer mom using our products will be very happy to have. Those are the technologies that along with our acquisition in Europe are going to set the path for the company's future.

TWST: All of this suggests that you give a great deal of attention to R&D.

Mr. Bazet: We do. In fact, we give a lot of attention. I think the cutting edge difference is not just R&D. Cobra is a fast follower. We are not a market maker. Although we have the leading market share other than in mobile navigation in every category in which we participate, we must listen to the consumer. We do a lot of consumer research. We ask the consumers what they think. As an example, when we entered the marine business, just recently, we started with our core competency of radios. We asked the marine consumers what they liked and disliked about their existing radios. They told us that it was a noisy environment and they couldn't see the screen sometimes. So we introduced the industry's brightest and largest screen on a VHF radio. We also made it sun resistant and we incorporated the speaker and the microphone in one hand-held piece so you didn't have to have separate speakers, and the engine noise didn't drown out the signal. That is an example of some of the things we have done. When I mentioned, Night Watch and Sound Tracker Technology, we traveled in the truck cabs and actually had one of our product managers ride around with truckers for several weeks to find out what their issues were first hand. We found out that at night the lights were too bright on these radios, not only the competitive radios but also ours. We also found out that the squelch noise was aggravating to the trucker the entire duration of his trip. If they tried to minimize the volume, they would also minimize the incoming signal. We solved both of those problems with the introduction of Sound Tracker and Night Watch Technology. Listening to the consumer, in short, is something that is very important to us. We think this has been the benchmark of our success in most of our products, and has added brand equity.