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Norstan Unveils New Growth Strategy April 27, 200 - New Economy Minneapolis, April 27, 2000 -- Norstan, Inc. (Nasdaq: NRRD) today announced a new growth strategy that will result in a significant increase in new revenue in fiscal 2001, which starts on May 1, 2000. Company officials project that incremental revenue resulting from this strategy will reach an annual "run rate" of $100 million by year-end fiscal 2001. Specifically, Norstan plans to market its industry-leading professional, consulting and traditional support services through a broad spectrum of enterprise solution providers in addition to the company’s current direct enterprise marketing activities. Such enterprise solution providers include Competitive Local Exchange Carriers (CLECs), Incumbent Local Exchange Carriers (ILECs), Internet Service Providers (ISPs), and Applications Services Providers (ASPs) as well as other channel partners, such as Value-Added Resellers (VARs), Systems Integrators, and Manufacturer Direct channels. Addressing the company’s more than 2,300 employees through a company-wide webcast, Norstan Chairman and CEO Paul Baszucki stated: "In order to achieve the aggressive revenue growth targets we have established for fiscal 2001 and beyond it is imperative that we extend our ‘reach’ beyond our traditional direct sales organization. Therefore, we will develop marketing relationships and alliances with other enterprise solution providers looking to deliver to their customers the leading-edge New Economy technology solutions that Norstan provides. These include Customer Relationship Management, Customer Contact Center, Unified Media, Hosted Internet Conferencing, Network Management Services and Converged Infrastructure, including Internet Protocol (IP) Telephony. Now these providers can turn to Norstan for assistance when their own focus or capabilities lie outside the required comprehensive support services. In short, we are opening up a large, fast-growing, and, essentially, untapped layer of services opportunities for these enterprise solution providers seeking to better serve their own end-user customers." Services offered to these providers include a complete spectrum of capabilities from applications planning through solution implementation, network monitoring, installation, support and maintenance. According to industry studies by Phillips InfoTech, a Parsippany, NJ-based technology consulting firm, the combined markets for these services are projected to be $28 billion by 2004 and expected to grow at an average annual growth rate of nearly 40 percent between 2000 and 2004. Phillips InfoTech participated with Norstan in the development of the strategy launched today. According to InfoTech CEO Alan Mendelson, his firm’s mission was to help Norstan propel itself into the new economy by building on its long standing reputation of outstanding customer service and loyalty. In addition, Norstan will provide a complete "end-to-end" offering for Network Management Support and Services, including 24-hour monitoring, remote trouble-shooting, and the traditional "break-fix" capability to the data networking and Internet Protocol Telephony markets. Demand for Network Management Services are projected to soar as business enterprises increase mission-critical e-Business voice and data applications over their data networks, a trend fueled by implementation of IP Telephony. These IP solutions are projected to grow at an average annual rate of 138 percent over the next four years, according to a recent study published by Phillips InfoTech. The requirement for 100 percent availability of integrated voice-data applications will demand that these networks be continuously monitored for quality of service and "up-time." In order to provide a "fast path" to the marketplace for these enhanced services, Mr. Baszucki announced the creation of a new business development organization. The mission of this new entity is to ensure maximum penetration for these market opportunities through the development of new channels and strategic alliances. Effective May 1, several existing Norstan business units currently engaged in these voice-data services will be transferred to the new business development organization and will redirect their efforts to serve the needs of the broad provider marketplace. Larry J. Schmidt has been named vice president of new business development, reporting to Michael J. Theisen, executive vice president of Convergence Services. This new business development team will assume primary responsibility for establishing and maintaining channel market relationships with enterprise solution providers. Mr. Baszucki explained that this growth strategy is intended to bring Norstan’s core competencies in communication and professional services to the forefront of its new business model. At this time Norstan is in discussions with a number of enterprise solution providers regarding its new business direction and plans to announce new alliances and marketing relationships as they develop. The company also expects its new "go-to-market" strategy will significantly enlarge the company’s geographic "footprint" beyond its traditional regional service areas. Mr. Baszucki also noted that the new growth strategy is consistent with announcements made earlier this year regarding the Company’s strategic direction. In March, the Company announced that its Norstan Consulting unit, led by President and COO Barry R. Rubin, would focus its information technology consulting practice on e-Business and Customer Relationship Management, exclusively. And earlier this month, Norstan announced that it had been named an IP/Telephony Specialized Channel Partner by Cisco Systems, Inc. "This is our growth path for the future," said Mr. Baszucki, "and our Board of Directors is enthusiastic about this new strategic initiative." But Mr. Baszucki also noted that this new direction will not diminish the company’s commitment to its current 18,000 customers. This existing customer base ranks Norstan as the fourth largest service provider in the country. "Norstan Communication Solutions, led by EVP Peter E. Stilson, will continue to grow our business with the most comprehensive portfolio of technology solutions and services available in the marketplace," Baszucki said. Norstan’s Communication Services unit, led by EVP Michael E. Laughlin, will provide traditional support services to the existing Norstan direct customer base as well as "new channel" customers that result from the efforts of this new business development organization. Norstan also expects its Communication Services business unit to increase its growth rate significantly by transitioning to a national multi-vendor service provider. Norstan is a global leader in technology services providing information technology, convergence, networking and communication solutions to business clients worldwide. Headquartered in the Twin Cities, Norstan’s sales and consulting service offices are located throughout North America. Through its operating units Norstan is a single source provider of leading-edge technology solutions and world-class technology services. Certain statements in this press release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risk, uncertainties, and other factors that may cause the actual results, performance or achievements of the company, to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements. Such risks, uncertainties and assumptions include, among others, the risks discussed in documents filed by the company with the Securities and Exchange Commission. Investors are encouraged to consider the risks detailed in those filings.  www.norstan.com |
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