AMI sees mega opportunity in network storage space

Updated: Jan 23 2002, 05:30am hrs
American Megatrends Inc (AMI), a high tech firm headquartered in Norcross, Georgia, sees great opportunity in network storage and will aggressively focus on this niche, according to the company’s founder.

“The world is going digital at a rapid pace. Large amounts of storage are required to be networked. We are working on new technology for interconnectivity, access, disaster recovery and security,” AMI founder-president S Shankar told The Financial Express.

The firm recently opened a development centre in Chennai. Set up at a cost of Rs 10 crore, it will initially have 80 professionals. “We are looking at 25 per cent growth in terms of staff strength in the first year. The lack of experienced system software professionals is keeping us from growing any faster,” Mr Sankar said.

To start with, the centre will complete projects for its parent. “The architecture and design will be done out of the US and the finishing will be done in India,” he said. The Indian centre is also bidding for some projects and, if these come through, it will run the gamut from design and implementation right up to testing for the projects.

AMI’s revenue from the Indian operations was Rs 7.6 crore last year and is expected to touch Rs 10 crore this calendar year. Globally, AMI revenues stood at $220 million in 2001.

AMI was founded in 1985 following Mr Sankar’s meeting with Michael Dell at Comdex —- the global IT mega-event. He convinced Mr Dell to use AMI’s motherboard designs to enable Dell Computers to build its own motherboards rather than outsourcing them. Mr Dell agreed and became AMI’s first customer.

Started with an investment of $7,000 from Mr Sankar’s partner, AMI is privately held, with Mr Shankar owning about half the equity and his partner and employees holding the rest. The company has not tapped venture capital and is debt free.

“In the late eighties, venture capitalists were not very active and they wanted a large portion of the company’s equity. The fact that we have been profitable every year and that there are no external financial interests has given us complete freedom in our operations,” he said.

Will AMI remain a privately held company in the future “We will look at ways to reward our equity holders,” Mr Sankar says, without answering the question directly. Although it hasn’t undertaken a valuation exercise, the sale of one of its division’s to LSI Logic for $240 million could be an indicator.