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Satellite success.

When you hear the name 4-l2 Electronics, the last thing that comes to mind is satellites. That's exactly what this business is all about - satellite communication. Satellites transmit two frequencies down to earth. One at 4 GHz, which requires a 10 foot dish. The other signal is 12 GHz, a four foot dish can pick up a 12 GH, satellite signal. "We wanted to be the first company to sell equipment that receives both frequencies, thus 4-l2 Electronics," says Chris Nelson, company president

The history of 4-12 Electronics is interesting, to say the least. Chris Nelson, a graduate of the Architecture program at NAIT College in Edmonton, had tried his hand at the construction business but wasn't successful. When Nelson's construction business folded, he packed his bags and moved to Manitoba.

Just twenty-two years old, the ambitious entrepreneur started working for a satellite business on Pembina Highway. Satellite dishes were making their debut and there weren't too many around- Unfortunately, this bud" did not survive. A determined Nelson incorporated the company's name comsat, and placed ads in local papers, offering satellite dishes to dealers. At this point in time, Nelson was still pinching his pennies and ended up living at the back of his shop because he couldn't afford to rent an apartment. Tunes were tough. Nelson was in businessfor three months before he sold his first dish.

In 1982, there were a little over a dozen satellites in the sky, each one having different channels on it. The only way to change satellites was to manually turn a handle on the dish itself. "Bundling up to go outdoors to select a new satellite wasn't all that practical in the Winter. So most people left their dish on one satellite signal" says Nelson.

He began to think about ways to turn a dish by remote control. Nelson asked engineer, Gary Kinch, who was working for him at the time, if it was possible to make a satellite dish turn by remote control. Kinch introduced Nelson to some of his associates, and after approaching a few groups Nelson finally found an engineering firm that could design his prodAfter some considerable bargaining, Vansco Electronics designed five prototypes for $5000 with rights to manufacture. One year later, in the spring of '83, the Comsat Tracker was born. "There was nothing like it," Nelson said. "The remote sensor would to the satellite and automatically stop." This model was the first of its kind where a spot could be programmed and the dish would stop at the desired location. Nelson sold the new prototypes to locals he had originally sold dishes to, at a cost of $1,500 each.

A trip to a Las Vegas Trade exposition and advertising the Comsat Tracker in an American TV Guide called 'Orbit' led to a flood of enquiries from across North America.

By this time, Nelson was running hs business our of an apartment and was joined by his younger brother Sheldon, who had just completed his degree in business.

Nelson admitted that it was an "asset." The two brothers started to get cheques and money orders in the mail daily for the Comsat Tracker; now things were getting exciting! Comsat started to sell to dealers and disributors. In 1984, Comsat Systems got away from the retail end of the business, and began dealing solely with distributors across Candad and parts from other companies was steadily increasing. Keeping one step ahead, Nelson introduced a lower priced tracker called the 'Scout.' The Scout could be purchased for roughly $600, well below the price of competing models.

Nelson's satellite business sold itself. For two continuous years, the Comsat Tracker and the Scout were on back order. Business was so good Nelson never required any bank financing because the money kept pouring in before the products were even manufactured. By the spring of 1985, the company had changed its name to 4-12 Electronics. Japanese competitors began producing similar products which meant 4-12 was confronted with more competition. While continuing the manufacturing of the Com-Sat Tracker, the company began full line distribution of satellite TV products. Nelson feared that if he had not done that, his. business could not have survived. The satellite industry exploded that year and 4-12 Electronics' sales skyrocketed.

January 16,1986, was D-Day for the Satellite Marketplace Worldwide, HBO, the popular U.S. Movie Channel had scrambled it's signal. Although descramblers were available, the U.S. movie channels were not able to sell programming in Canada. For Nelson, the satellite marketplace had died. Nobody was buying satellite dishes. "You couldn't give a dish away, " he remembers. Dealers, distributors, and manufacturers all across North America went out of business. 4-12 and Chris Nelson held on! Almost one year later, in December of 1986, the satellite business was resurrected. Computer software hackers were able to bypass the scrambling using a computer chip. Once word got around, dish owners bought descramblers, and the marketplace went haywire. 4-12 had huge backlogs. Nelson was back in business again. EXPANSION NEEDS CAPITAL

4-12 Electronics was named the fifth fastest growing company in Manitoba for 1989. For 1990, the company has moved up three notches to number two. "I feel good. It's reassuring to know that hard work is paying off." Nelson employs 18 people with a branch office in Vancouver, and an additional warehouse in Fargo, N.D. The recent acquisition of an existing satellite distributor in Calgary will eventually become a branch for 4-12. In addition, Nelson wants to hit the international market. "Canada's Market is very mature but the developing countries are just starting to put up satellites. South America, Africa, and even Australia all represent areas of potential growth."

A 4-12 delegation recently spent four weeks in Northern Africa doing demonstrations for a number of large potential buyers. "We're on top of things. When developing nations require satellite products we intend to be there." Nelson wants to expand, "I want to build a large export company. The only thing holding us back is dollars. Time is required to secure contracts. Right now 90% of our funding is being spent developing and increasing our market share in western Canada. Two or three million dollars could potentially net us 20 or 30 million worth of sales. This market is huge. Nelson adds that it takes at least $1 million to start out as a distributor and you need to sell over 500 systems a month just to be a player.

Last fall, 4-12 applied to the CRTC for cable licences. Nelson wanted to diversify a little more and describes cable companies as being "Cash Cows" with secure long term potential. He applied to install cable in 18 Manitoban communities, he never got any of those licences. "We were set up to pursue the cable project; we did our homework better than anyone else. We were unopposed in six or seven towns, and we didn't get those either . . ." Nelson obviously disappointed, feels he will be in the programming delivery business eventually, if not through cable, through other technologies currently being tested. NO RECESSION AT 4-12

Officially, Canada is in a recession, but 4-12 hasn't felt the pinch. "As times get tougher people will stay home more. Home entertainment is one of the fastest growing businesses today. You can buy a dish for as low as low as $60.00 per month. It's a fairly solid investment."

Even with the impending Goods and Services Tax, Nelson doesn't think his business will be hurt. Prices should remain virtually unchanged. With the removal of the Federal Sales Tax in favour of a lower Goods and Services Tax the cost of inventory will be reduced, offsetting service taxes which will be put in place. Free Trade agreements with the U.S. have actually helped. The duty on products imported from the U.S. is being reduced over a number of years. With the elimination of the F.S.T. and duties on U.S. built products, consumers Will save money.

The future of this local company looks anything but bleak. Nelson, the 30 year old pioneer behind 4-12 Electronics, has accomplished more in the past eight years than some people do in a lifetime. This aggressive, successful entrepreneur is taking on the world with his satellite business. Expansion will mean more jobs and growth for a country that could use some adrenaline in its economy. For Chris Nelson and 4-12 the sky is the limit!
COPYRIGHT 1991 Manitoba Business Ltd.
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Copyright 1991 Gale, Cengage Learning. All rights reserved.

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Title Annotation:Advertisement; 4-12 Electronics
Publication:Manitoba Business
Date:Jan 1, 1991
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