(FORTUNE Magazine) – NORSTAN

Norstan Chief Executive Paul Baszucki, 54, took aim five years ago at some of the most advanced communications markets around. Until then the company was mainly a distributor of equipment made by Rolm, a subsidiary of Germany's Siemens. Rolm still accounts for 30% of sales, but the technologies Baszucki focused on, including videoconferencing and computer networking, have grown explosively and are now Norstan's fastest-growing businesses.

The suburban Minneapolis company distributes all kinds of telecommunications gear for businesses, from simple telephones to advanced computer-run switches. Along the way to a sale, Norstan provides consulting services, advising clients on the most efficient ways to use the latest equipment to meet their needs. "The average business customer is overloaded with choices," says Baszucki, who co-founded Norstan in 1970. "Our strategy is to be there with the knowledge to put it all together."

Harley-Davidson, 3M, and 13,000 other companies call on Norstan to enhance or service their telecommunications and computer systems. Harley-Davidson, a steady customer since 1977, uses equipment supplied by Norstan to run its toll-free Hog line, which keeps the motorcycle maker in touch with its freewheeling customers. Glenn Powers, an analyst at Dain Bosworth in Minneapolis, expects Norstan's net income for the fiscal year ending in April 1996 to rise 17%, to $8.1 million, on a 17% increase in revenues, to $335 million. The stock traded recently on Nasdaq at $23, or 12 times Powers's estimate of 1996 earnings per share.

Baszucki hasn't stopped pushing into new technological areas. The company recently became an authorized dealer of Novell software, which it bundles with hardware and other software to create computer networks for customers. Last December, Norstan acquired Renaissance Connects, a Toronto-based computer consulting firm. It has also started offering to operate a customer's entire telecommunications or data center. Arthur Andersen and EDS dominate this field, but Norstan has signed up British Petroleum's regional headquarters in Cleveland, among other customers.

AETRIUM

Speed is critical to semiconductor producers, but so is the careful handling of materials. Aetrium, in St. Paul, is a leading manufacturer of devices known as test handlers, which it sells to National Semiconductor, AT&T, and other major chipmakers. Handlers are used near the end of the production process to move batches of the delicate silicon chips from one area to another for testing before they go into products ranging from microwave ovens to automotive electronics. Says Jim Critzer, director of purchasing at national Semiconductor: "If the leads on a chip are mishandled and bent, that can be a defect." With Aetrium's handlers, manufacturers can test as many as 8,000 chips an hour.

Aetrium began in 1983 and grew partly through acquisitions. The most recent came last November, when the company paid $7 million for Sym-Tek Systems, an $11-million-a-year producer of test handlers that was in Chapter 11. Aetrium went public in 1993 at $8.75 a share. Clinton Morrison, an analyst at John G. Kinnard in Minneapolis, expects net income in 1996 to increase 23%, to $6.9 million, on a 21% rise in revenues, to $51 million. The stock traded recently on Nasdaq at $14.25, or ten times Morrison's estimate of 1996 earnings.

VITALINK PHARMACY SERVICES

The drive to contain health care costs is fueling the growth of Vitalink, which delivers prescriptions and other medical supplies to more than 40,000 nursing home patients across the U.S. The company also keeps track of patients' medical histories to determine how they might react to various medications.

Vitalink, based in Naperville, Illinois, operates 17 large pharmaceutical centers, mainly in the east and midwest. Because it buys in giant quantities, the company pays less for medical supplies than most local pharmacies and passes the savings on to nursing home operators.

John Rezai, an analyst at Pryor McClendon Counts & Co. in Philadelphia, expects net income in 1995 to surge 26%, to $11.6 million, on a 14% rise in revenues, to $112 million. The stock traded recently on Nasdaq at $14, or 17 times Rezai's 1995 earnings-per-share estimate. Vitalink is 82% owned by Manor Care, one of the largest operators of nursing homes and a big Vitalink customer.