Galileo Refocuses After Xerox Loss

Jennifer L. Morey

STURBRIDGE, Mass. -- Despite the loss of its biggest customer earlier this year and the resulting financial blow, Galileo Corp. officials are confident that the company will be able to get back on its feet by refocusing on its strategic objectives in the medical and telecommunications industries.
The day after Galileo announced that Xerox Corp. would no longer be purchasing its dicorotron assemblies, Galileo's stocks dropped nearly 12 points, from 185/8 on Feb. 12 to 67/8 on Feb. 13. Xerox's purchase of the photocopier components represented 48 percent, or $20.4 million, of Galileo's revenues for fiscal 1996.
Furthermore, Galileo reduced its work force by 16 percent, a total of 39 employees, and either postponed or eliminated a number of discretionary expenditures.
Galileo officials realize that the company will not immediately recover from the Xerox loss, but they are sticking to their original goals of developing growth-market products. President and CEO William Hanley thinks the company will reposition itself and regain profitability by the first quarter of 1998. "Our strategy of diversification into both medical and telecommunications products, as well as the continued health of our Scientific Detector Products Group, provides a strong foundation for future growth," he said.
Among the company's strategy areas is endoscopic imaging, according to Greg Riedel, the firm's chief financial officer. Consistent with this focus, Galileo's Medical Products Group recently received a multimillion-dollar order from Sofamor Danek for a single-use endoscope developed in a collaborative effort among the two companies. The device is for a minimally invasive spinal procedure that could eliminate the need for general anesthesia and reduce patients' hospital stays.
According to Riedel, dicorotron technology was "not a part of our growth strategy." And though Galileo is disappointed by the end of its relationship with Xerox, it can now concentrate on technologies for future markets.