July 2003

In the CEO Spotlight section in Internet Telephony� magazine, we recognize the outstanding work performed by exemplary companies. Each month we bring you the opinions of the heads of companies leading the Internet telephony industry now and helping to shape the future of the industry. This month, we interviewed Nick Branica, President & CEO of Comdial.

IT: What is Comdial�s mission?
NB: Comdial�s mission is to provide innovative and cost-effective telecommunications solutions to small and medium-sized enterprises (SMEs). We also recognize that SMEs must support technology choices with solid business cases.

IT: What is your vision for Comdial, and how is the company positioned in the next-generation telecom market?
NB: My vision for Comdial is for the company to continue delivering leading-edge technologies that drive paradigm shifts in the SME telecom space. Bringing to market innovations that cost-effectively allow small and medium-sized enterprises to cross the next-generation telecommunications chasm has been Comdial�s core competency over the past 25 years. This is the key to the company�s success and will remain Comdial�s sole purpose into the future.


IT: Describe some of the key decisions that you have made as CEO to steer your company through the recent challenging financial straits.
NB: When I became Comdial�s CEO several years back, the company was in a very precarious financial position. However, we still maintained a solid product portfolio, enthusiastic employees, and an industry-leading channel partner network. The challenge was to optimize operations and financially restructure Comdial while preserving as many jobs as possible, sustaining significant R&D investment, and retaining dealer loyalty.

To optimize operations, we streamlined our product offerings by eliminating product overlap and focusing on our profitable product areas. While we could do anything, we couldn�t do everything. By focusing on its product strengths, Comdial was able to maintain significant investment in key product areas, such as IP telephony.

To remain cost competitive, we made the decision to fundamentally change the operating expense structure of the company. This involved consolidating our headquarters operation in Sarasota, FL and outsourcing manufacturing. This was a difficult decision as it involved a rather large reduction in force. While everything went as planned, the events of September 11, 2001, the economic recession, and the failure of our primary contract-manufacturing partner led to unforeseen production issues. However, Comdial has overcome these obstacles without compromising product quality.

Despite the benefits of a streamlined product offering and optimized operations, Comdial was still constrained by a heavy debt burden. We succeeded in negotiating a dramatic reduction in our financial liabilities with some new investment. This resulted in a complete financial restructuring of Comdial. This restructuring provided Comdial with the capitalization required to aggressively execute our long-term business plan.

By successfully executing on these difficult decisions, Comdial is now in great shape to compete in the dynamic telecommunications marketplace and has even managed to complete an important acquisition that strengthens our technology position and enhances our ability to innovate.


IT: What is the most pressing issue facing our industry today, and what can be done to alleviate this problem?
NB: The most pressing issue facing telecom customers today is whether or not IP telephony is really worth the investment and, if so, how can they preserve their investment in previously installed equipment while migrating to IP. Technologists will have you think that if you are not supporting IP telephony today, your company is already behind the technology curve. This assertion is based on the promise of emerging IP-based voice/data applications and their associated �soft� dollar savings. With the latest economic slowdown, however, enterprises require �hard� dollar business cases to move forward with new technology investment. As such, the killer applications driving the move to IP telephony in the SME space remain toll bypass and networking.

IT: Describe your view of the future of the IP telephony industry.
NB: IP telephony has come a long way since the idea of transporting voice across data lines was first proposed. The industry is overcoming significant challenges in the areas of quality, standardization, and cost effectiveness. However, I believe, we are just seeing the tip of the iceberg. Analysts predict that, at its current 30 percent annual growth rate, IP telephony will overtake TDM around 2006.

I believe that all voice calls will be made over packet switched networks at some point in time. IP technology holds the promise of increased functionality, lower product cost, reduced maintenance costs, simplified installation, and many more benefits.

IT: What is your philosophy regarding customers?
NB: Comdial�s philosophy is that customers are for life, and we have designed our company with this philosophy in mind. We are about more than just providing customers with products, but providing them with business tools to help them increase their productivity and profitability.

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