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The Times 100: CALIFORNIA'S TOP COMPANIES | COMPANY
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On-Point Technology Systems

No. 2, Stock Price Gain

May 06, 1997|CHRIS KRAUL

Early last year, On-Point Technology Systems was on the verge of crashing, after two successive years of annual losses exceeding $8 million and steady market erosion for its self-service lottery ticket and phone card vending machines.

Then new Chief Executive Frederick Sandvick launched the San Diego-based company on a scorched-earth cost-cutting campaign that eliminated $2.5 million in overhead and cut payroll in half, to the current 130 employees. Sandvick also moved the company to a smaller plant and offices.

Sandvick, a former executive with Jackpot Enterprises of Las Vegas, also changed the corporate name from Lottery Enterprises, which was founded in 1991, to signal an expansion of product lines.

The measures were what the doctor ordered.

And though On-Point is still a low-price stock (about $2 a share now), its dramatic recovery puts it near the top of the stock price gain chart. The cost reductions helped produce three straight quarters of profit for On-Point last year. For all of 1996, On-Point reported a $135,000 profit on revenue of $11.9 million, contrasted with losses of $8.1 million on $16.3 million in 1995 sales. The bulk of the company's revenue comes from sales of lottery vending machines.

The drop in revenue reflects the near-fatal loss of market standing the company suffered. On-Point had to write off more than $3 million in worthless inventory and other investments last year.

Still, investors seem to feel better about the company's prospects, as they bid up the stock price from a low of 47 cents last year.

"We right-sized and put our house in order and stayed focused on what we needed to do," Senior Vice President Brian Roberts said of 1996. The company also raised $800,000 with the sale of 10% convertible notes. The company said recently that it expects additional debt financing this year.

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