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APEX PC SOLUTIONS: SERVING THE SERVERSA children's book called Something From Nothing by Phoebe Gilman is proudly displayed in Kevin J. Hafer's spartan office. The tale of how a family of mice forged a feast from table crumbs is akin to Hafer's own story. Now CEO of Apex PC Solutions Inc. (APEX), he built the company from the scraps of a computer-service business, turning it into a successful hardware manufacturer that has grown fat on the red-hot market for PC servers. Simply put, Apex eliminates clutter that has built up as corporate computer networks grow larger and more complex. Its switching equipment allows information from multiple servers--the powerful PCs that control networks of individual computers--to be displayed on one screen. This means the servers can also be stacked in cabinets--low-tech equipment Apex also sells. Today, manufacturers such as Compaq, Hewlett-Packard, Dell, and IBM offer Apex equipment to networked customers. Partnering with such prime manufacturers helped Apex reach No.4 on BUSINESS WEEK's Hot Growth list. Over the last three years, its revenues have soared an average 93.7% annually, to hit $55.4 million in 1997. At the same time, earnings have more than doubled on average, to $10.5 million. Even more impressive, the company--based in Woodinville, Wash., a suburb east of Seattle--returned an average 57.1% on its invested capital. Hafer, 41, a high school graduate, learned electronics while working on a U.S. Navy destroyer. He then parlayed the experience into gigs as a computer technician, working as a manager at electronics giant Harris Corp. for 10 years. In 1990, he landed a job as general manager at Apex Computer, a computer services company. While maintaining servers at Microsoft Corp. for Apex, Hafer foresaw the need for a more efficient way to manage the machines. Microsoft employees were running from server to server to administer the giant's own internal network. Hafer figured he could find a way to hook them all up to one monitor and keyboard. In 1992, he persuaded Sterling Crum, his boss and Apex' owner, to fund a spin-off that would go after this network-management niche. TIGHT SHIP. Hafer assembled a small team of engineers to design the software that enabled one machine to monitor several servers. With only 12 employees its first year, Apex PC Solutions rang up $1 million in sales--including a contract with Microsoft. ''This was a bootstrap company,'' Hafer says. There are now 72 workers, but the ex-Navy man still runs a tight ship. To trim costs, manufacturing is outsourced to smaller companies around Puget Sound. Apex focuses on assembly, testing, and design. Most sales are closed by fax and phone. And to keep major computer makers happy, Hafer is obsessed with filling orders promptly. ''Kevin has a fanatical belief in customer service and knows every detail of the business,'' says Jeffrey T. Chambers, an Apex board member and managing director of TA Associates, a private equity fund that bought half of Apex PC Solutions in 1995. That has clearly paid off. Today, Apex has captured 41% of a market that's growing at a rate of 35% a year, according to International Data Corp., a research firm in Framingham, Mass. Sales should nearly double again this year, analysts say, to $106 million, while earnings are expected to rise 50%, to about $15 million. Hafer already is staking out new territory. While Apex dominates sales to companies shipping new servers, it has barely touched the jumble of server networks already out in the field. ''Imagine what we can do in a market that has been virtually untouched,'' Hafer says. Hafer also wants to invade the European market--and recently raised the cash to do so. The company has $51 million in working capital and no debt, thanks to its February, 1997, initial public offering and a second offering a few months later. The stock went public at 9 1/2 a share and trades today around 27. Once content to collect scraps left by others, Apex now anticipates a feast of its own.
By Seanna Browder in Woodinville, Wash. RELATED ITEMS
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Updated May 21, 1998 by bwwebmaster
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