Cincinnati Microwave blazed on, off radar screen – Cincinnati … – The Business Journals

Cincinnati Microwave Inc., to many in the area, is a distant memory. Since the company closed its doors in 1997, it’s been easy to forget its mid-’80s boom, with record profits and $95 million sales forecasts for the radar detector manufacturer.
Not only did Cincinnati Microwave hit its forecast in 1984, it beat it by $16 million, thanks to a tinier version of its popular Escort radar detector, called Passport.
Passport became a best seller. Earnings were up 46 percent in 1985 — a giant leap compared to the 16 percent increase seen during 1984. Earnings that year were nearly $76 million.
In 1983, CMI sold 230,000 Escort units, and sales were expected to climb to 325,000 in 1984. From September 1983 to November 1984, the Deerfield Township firm went from 179 employees to 316.
Cincinnati Microwave CEO James Jaeger was the highest-paid executive in the Tri-State and a new member of the Forbes 400 list of richest Americans. Times were good.
Today the former CMI headquarters spot, which was auctioned off in the late 1990s in bankruptcy court, is the site of a Home Depot store.
All the surrounding property and the lavish headquarters facility, complete with workout rooms and racquetball courts, has been sold. Home Depot tore down the original building.
Employees found out the company was closing on Feb. 14, 1997, known as the “Valentine’s Day Massacre,” said Steve Geers, who worked as an electrical engineer at Microwave.
Geers now is a partner with Mason-based Cincinnati Technologies, along with four other ex-CMI employees. Cincinnati Technologies offers engineering support and expertise to several companies in the wireless arena, experience the five honed working in CMI cordless telephone division.
CMI was the inventor of the spread-spectrum cordless telephone, a business that never made much money even though its phones were considered some of the best in the world at the time.
Problems started to arise a few years after the company went public in December 1983, which was a “bad idea,” said Greg Blair, president of Escort Inc., another spinoff company, and former CMI vice president of operations.
In that initial public offering, CMI sold nearly 1.9 million shares at $7.62 per share, drumming up $13 million in cash. Most of that went to pay off debt in the form of a loan used to buy out shares owned by Mike Valentine, according to the company’s 1985 annual report. Valentine and his father had founded the firm in 1976.
When the company went public, suddenly the world knew about Microwave’s nearly 30 percent profit margin. It didn’t take long before CMI had “20 competitors,” Blair said.
The new players cut costs and made cheaper units, pricing Microwave out of the very market it had built. A lifting of the 55-mile-per-hour speed limit in 1995 also spelled doom for radar detector manufacturers, especially CMI, which had higher-priced units.
More bad luck hit when, in a mid-1980s attempt to diversify the company, Microwave launched StarCast, a television satellite receiver. The same day the service was launched, networks began scrambling their signal. That blocked the new dish owners from seeing anything but snow on their TVs.
The division lasted two years and cost the company several million dollars, Blair said.
Though it was a setback, Microwave recovered for a while. But stress from competition and fear from investors that the lucrative radar detector business, the most profitable by far of all Microwave ventures, could end in an instant if a federal law banned the devices, led to the company’s demise, Blair said.
Blair, along with Chicago businessman Matthew Coleman bought CMI’s patents, trademarks and inventory for $10.6 million. Escort’s first day of business was April 10, 1997, the day after the CMI bankruptcy was finalized.
The next day they hired 53 people, mostly former CMI employees.
Today about 70 percent of Escort’s employees used to work at CMI. About 250 people work for Escort — 180 at a Canadian plant assembling their products and another 70 in West Chester.
Dan Kindel, Geers and Jim McCurdy, also all partners at CT, said when the CMI headquarters was scheduled to be demolished, they and several ex-employees gathered at restaurant near the property, bought a beer and watched their old workplace get torn down.
“It was like watching somebody die,” Kindel said. “I think the people who got laid off had it easy in some ways.”
Kindel had been selected to stay on at CMI and spent the summer closing the facility after the February announcement. The three said today they are not bitter about what happened. Just sad.
James Jaeger, CMI’s former president and chief executive officer, still lives in Cincinnati. He could not be reached for comment.
Valentine sold his stock for $24 million to Jaeger in 1983. He now owns Valentine Research Inc. in Blue Ash and makes radar detectors. Valentine, through a spokesman, declined to comment for this story.
Blair, who worked at Microwave from 1984 until the company’s closing in 1997, enjoyed his time there. Indeed, everyone contacted for this story said they liked working for the company in its heyday.
“I saw some really great times there,” Blair said.
John O’Steen was Microwave’s president from 1984 through 1989 and feels good about his time with the company.
“It was a fairly visible business. It was interesting,” O’Steen said. “It was private and quiet for a long time … but when it went public it told the world how profitable this business was. It brought in the Japanese and Taiwanese and changed the market very rapidly.”
O’Steen declined to speak about the company’s less-happy times. He went on to co-found the Frontgate catalog business, a division of Cornerstone Brands Inc., in 1991. Frontgate specializes in upscale merchandise sold through the mail, over the phone and in stores.
Its nearly 1 million-square-foot facility happens to be located next to Escort Inc.’s offices in West Chester.
“There were a lot of good people, very dedicated folks (at Microwave),” said O’Steen, now retired. “It was an exciting time. I enjoyed it.”
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