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PairGain Technologies Inc.

No. 1, Fastest Profit Growth

May 06, 1997|GREG MILLER

There's a saying at PairGain Technologies Inc. that copper phone lines may be buried, but they're not dead. That aphorism helps explain the company's phenomenal profit growth last year.

Tustin-based PairGain makes devices that help turn copper phone lines into high-speed data lines. The technology has been a breakthrough for phone firms that are faced with surging demand for high-speed data lines but want to avoid the cost of installing fiber-optic cables.

PairGain now has contracts with every regional phone company in the country and, according to analysts, a deft management team that is making all the right moves to keep business growing.

The firm's profit of $41.7 million last year was up 9,367% from a year earlier. But that statistic partly reflects the fact that PairGain's profit a year earlier was reduced by $15.9 million because of a loss sustained as a result of unauthorized trading by its financial advisor.

Growth related to the company's core product for corporate customers probably can't continue at quadruple-digit rates, but PairGain is expected to unveil a product midyear designed to speed Internet access for home PC users.

In the near term, PairGain's profit margins will be under pressure from rising competition, the company warned last week. Its stock has tumbled from $43 last year to about $20 now on Nasdaq.

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