To describe ADC as being once again in an expansion mode would be entirely accurate. To imply that the activity will look anything like the company's late-1990s acquisition bender couldn't be further from the truth.

No one acknowledges that fact more readily than Bob Switz, president and CEO of ADC since May 2003 and a 12-year veteran of the company. Switz has seen it all during his ADC tenure: As chief financial officer from 1994 until his appointment to CEO, Switz was an instrumental figure in both the rampant expansion of the company in the mid- to late-1990s and the extensive contraction that followed as a result of the telecom industry downturn.

Now, nearly three years into his CEO tenure, Switz is in many ways ideally positioned to be at the helm of ADC and its new growth strategy: He possesses a good mix of financial sensibility, telecom industry knowledge and leadership ability; he has seen first-hand what works and what doesn't for ADC; and, perhaps most important, he has a deep understanding of both the ADC work force and the investor community. All of that is critical as ADC once again attempts a growth strategy based on both internal expansion and acquisition.

“People understand that this is still a maturing and developing company,” Switz said. “Customers now understand better what ADC is. They have some nervousness about our acquisition strategy, but it's different than it was in the past. If we do something of scale, there would probably be more concern.”

That concern is warranted when ADC's recent history is taken into account. If you stopped following the story of ADC in mid-2003, you might expect the company to be on the telecom industry scrap heap by now.

This long-established supplier of connectivity products was one of the great success stories of the mid- to late-1990s telecom boom. The company flourished, enjoying rapid growth and share prices in the stratosphere, acquiring its way into everything from network software to broadband wireless, taking financial stakes in a slew of other technology companies and regularly exceeding earnings expectations.

In 2000, at what would later be identified as the peak year of that phenomenal run, ADC's 10-year CEO, Bill Cadogan, announced that he would step down after personally overseeing the search for his replacement. At the time, Cadogan's expectation was that both ADC — which by early 2001 was a $3.2 billion company with more than 22,000 employees worldwide — and the telecom industry overall were poised for even more dramatic growth. Cadogan himself would transition to the venture capital realm, presumably to further reap the benefits of telecom expansion.

The rest, as they say, is history. The now legendary “slowdown” in telecom service provider spending began in late 2000, and companies like ADC, which had grown rapidly and acquired aggressively, bore the brunt of it. The cost cutting at ADC started even before former AT&T executive Rick Roscitt took ADC's helm in February 2001.

Thus began one of the most turbulent periods in the history of both ADC and the telecom industry. As it did for virtually all communications technology vendors, 2001 marked the beginning of a string of cost cuts, work force reductions, divestitures and restructurings for ADC as the telecom industry contracted, adjusted and eventually began to stabilize. A year into his tenure as CEO, Roscitt had already cut tens of thousands of jobs, fired an internally popular chief operating officer and begun to divest the company of much of what it had acquired in the Cadogan days. In May 2003, Roscitt himself left for the No. 2 spot at a recovering MCI, and Switz, ADC's chief financial officer since 1994, was named president and CEO.

Given that past, the concern of shareholders, customers and employees about ADC's acquisition strategy certainly is understandable. So is Switz's pragmatism about expanding the company — though he is adamant about the need for ADC to expand again, particularly as the carrier field continues to consolidate, and confident about where growth is possible.

“We see several years of healthy growth,” Switz said. “To really execute fully on our strategy to be relevant to the largest players, we need to grow along with them.”

How ADC does that will be critical. Dick Parran, ADC's vice president of business development, who oversees merger and acquisition activity as well as the company's services organization — another growing part of the company with potential for further expansion — has, like Switz, lived through and was directly involved in the ups and downs of ADC's acquisitions and divestitures history.

“In the late '90s, it was all about buying a seat at the technology auction. Today, it's all about real products that drive networks to the height of efficiency,” Parran said. “For ADC, it was about scaling back to what we were absolutely good at.”

ADC's growth potential, Switz said, is primarily in the areas where the company has been strong traditionally and where it has bolstered itself recently with acquisitions like that of Fiber Optic Network Solutions (FONS) and the Germany-based Krone Group. Switz described ADC's technology as ranging “from the central office to the edge to the enterprise, with a wireless access overlay,” and encompassing fiber to the x (FTTx), copper, central office (CO), outside fiber and structured cabling for the enterprise and wireless.

“We're all about getting the signal from A to B — everything it takes to distribute, connect and signal manage,” said Steve Grady, ADC's vice president of global marketing. “We have what you need in the infrastructure layer of your network if you really want to have good QOS. It's a multibillion-dollar opportunity.”

John Celentano, president of the telecom industry consulting outfit Skyline Marketing, said he believes ADC has successfully recovered from the issues created by the downturn and its need to “right-size” itself.

“They pruned that which was not germane to what they were really good at, and they kept what they felt they could continue to build on,” Celentano said. “What you have today is a company well-positioned to be the leader in connectivity. It fits together much tighter than a lot of what ADC had in the past.”

Celentano added that the acquisition of Krone in particular was a smart move for both technology and regional advantage. “Krone has an excellent product that serves them well, particularly when used on cabinets in fiber to the node,” he said. “That was a very good acquisition, and it also gave them a presence internationally.”

The wireless sector is one in particular where Switz and company see a lot of opportunity for ADC. The company's wireless holdings now are comprised of indoor and outdoor digital signal extension solutions that can act as alternatives to microcell and picocell technology and can more economically redistribute signals in a wireless network, said Michael Day, ADC's chief technology officer.

“It's not just coverage — it's the ability to reallocate capacity to where it's needed more,” he said. “The indoor marketplace has become a must-have for carriers and for building owners. And if I'm planning RF for a city, I don't just cover the freeways.”

Switz acknowledged that while important, ADC's wireless play is currently a niche one — which to him means it represents a growth opportunity.

“It's fair to call the products we have niche plays, but they're niches that could play out in a meaningful way,” he said. “We're not known as a wireless player. We want to get more relevant in wireless — we need to gain more bulk.” Switz added that ADC is “looking at opportunities to participate in Wi-Fi and WiMAX.”

Other areas of potential expansion include the enterprise, fiber and even copper. Jack Field, ADC's vice president of copper product management and global connectivity solutions, said the Krone acquisition doubled the copper business, and his group's challenge is to stay embedded within carriers as their copper networks continue to evolve. “We have to win the next-generation migration,” Field said.

As for the fiber realm, ADC's product portfolio puts it in a good position, given all the FTTx activity in multiple service provider sectors. And, as fiber moves further out and closer to the edge of networks, ADC is able to leverage and adapt technologies that have been successful for it in the past.

“We incorporate the design philosophy we've used for years in the CO into the OSP,” said Tom Kampf, director of global fiber product management.

Finally, in the enterprise sector, ADC executives are confident that the company's product breadth and carrier experience make it well-suited to be an end-to-end enterprise supplier.

“A lot of enterprises are trying to emulate carrier-class infrastructure, and we have one of the most comprehensive solutions for the enterprise than anyone on the market,” Switz said.

In general, ADC does indeed seem to be proving itself as a rather rare example of a company that survived the telecom boom and bust and returned to solid ground on which to attempt growth once again. Much of that is likely attributable to Switz's leadership over the past few years.

“Switz brings continuity to the organization,” Celentano said. “He knows the company intimately — where it was and where it's going.”

Switz himself said he believes ADC's past failings — primarily at communicating its strategy poorly both externally and internally — have been righted.

“We run this company with a lot more collaboration than we have in the past,” he said. “People communicate across divisions, and we're focused on the customer and trying to truly understand customers' needs. We've also reinvigorated innovation within the company and are pushing our development programs for speed to market.”

The company's biggest challenge now, Switz said, is keeping ADC's growth in time with the growth of its customers, dealing with downward pricing pressure and meeting investor expectations.

“It helps to be large when you're selling in global markets. If you're not over $3 billion in revenue, it's hard to be a global company,” he said. “We have to have the kind of scale that allows us to compete on price. And our shareholders would like to see us operate at the high end of industry growth.”

As to whether ADC itself could be a target of acquisition, Switz would not give much more than the standard public company line (“We would always do what's best for our shareholders.”) other than to say “There are certainly people out there who would have an interest if we encouraged it.”

And after everything the industry has experienced, especially over the past decade, Switz is still able to retain enthusiasm about the long-term opportunities that await ADC.

“The major developments in this industry take a long time,” Switz said. “It's all about society being ready, and it takes society a long time to change. I think we're only now at the front end of the broadband era.”

ADC'S 2005 HIGHLIGHTS

• ADC's sales surpassed $1 billion in 2005. Net sales grew by 51.2% compared to 2004, and diluted earnings per share increased 148%.

• Excluding the company's 2004 and 2005 acquisitions, ADC's sales growth last year was 22%, exceeding the industry growth rate of 9%.

• Broadband infrastructure and access accounted for 81% of 2005 sales. Professional services accounted for 19%.

• ADC increased operating income by 194% in fiscal 2005 and lowered operating expenses to 30% of sales, compared to 36% in fiscal 2004.

• ADC's customer breakdown in 2005 was: 59% telco, 20% wireless, 15% enterprise, 4% OEM and 2% cable TV/broadcast.

• ADC completed its acquisition of Fiber Optic Network Solutions, which is expected to double ADC's FTTx outside plant sales.

• Sales in 2005 of ADC's OmniReach FTTx products grew 245% (excluding the FONS acquisition).

• ADC grew 2005 sales of global fiber connectivity solutions by 40% (excluding FTTx products).

• Sales of ADC's enterprise product offerings increased to $181 million for full-year fiscal 2005, compared with $79 million for the second half of fiscal 2004 following the Krone acquisition in May 2004.

• ADC grew 2005 sales outside of the U.S. by 73%.

• Sales of global copper connectivity solutions grew in 2005 by 10% (excluding the Krone acquisition).

• Krone copper connectivity sales increased to $185 million for fiscal 2005, compared with $67 million for the second half of fiscal 2004.

• In May 2005, ADC acquired OpenCell, a developer of wireless solutions that work across a wider range of communications frequencies and network protocols.

• ADC's Digivance sales grew 99% in 2005 (excluding the OpenCell acquisition), gaining traction with U.S. wireless carriers.

• Sales in ADC's Professional Services group grew 34% (excluding the Krone acquisition).