Enter Max Palevsky

During its best year in history, the computer industry's shipments rose 71% to 13,700 units. Giant IBM's 1966 sales jumped 19% to $4.2 billion, and some longtime losers, Sperry Rand's Univac division and Honeywell's computer-making operation, turned the profit corner in handsome fashion. But it remained for little Scientific Data Systems of Santa Monica, Calif., to print out some of the most exciting gain figures. Only five years old, S.D.S. reported 1966 sales of $55.5 million and profits of $4,300,000--both up 27% over 1965.

Set up in 1961 by six former employees of the Packard-Bell Electronics Corp., S.D.S. is one of three U.S. computer makers to have consistently turned a profit. Warily avoiding competition with the other two--IBM and Control Data--S.D.S. has concentrated on the small, once neglected scientific market. There, says S.D.S. President Max Palevsky, 42, leader of the original six, "we saw a class of problems that should be solved by computers, but for which no computers were being built."

The company's small to medium-size and surprisingly inexpensive models (basic price range: $30,000 to $200,000) were immediately successful, pushed S.D.S. into the black by 1963. Building for highly sophisticated users, mainly in Government aerospace and defense projects, which account for 55% of the company's income, S.D.S. also scored some technological breakthroughs. Among other things, it was the first manufacturer to make temperature-immune silicon conductors exclusively, enabling computers to be used outside specially sealed, air-conditioned rooms.

A onetime $100-a-month U.C.L.A. logic instructor who is equally adept in academese and computerese, Palevsky aims to keep S.D.S. at that nimble size where "we need optimize our strategy only in a small sector of the market." S.D.S. may already be growing out of that league. Last December the company delivered the first of its Sigma family of realtime, third-generation computers. The most complex, Sigma 7, costs up to $1,000,000, can serve more than 200 users simultaneously on a time-sharing basis. Sigma thus represents a big step into highly competitive commercial data processing.

Will S.D.S. suffer the problems of Control Data, whose 1965-66 earnings stumbled when it ran short of cash amid a similar expansion? Palevsky is unconcerned, even though S.D.S. last year boosted its debt from less than $2,000,000 to more than $16 million, built a fifth new plant and increased employment to 2,900. Reflecting their own confident computations, Wall Street investors have pushed S.D.S. stock up 42 points to $84.50 since October, doubling the value of Pioneer Palevsky's 15% shareholding to $27 million--a pretty fair dividend on his original 1961 investment of $20,000.

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