Technology Firms Saw Improvements in 2010

December 31, 2010 | Reprinted with permission of the New Mexico Business Weekly Copyright 2010; by Kevin Robinson-Avila, NMBW Senior Reporter

Despite the sluggish economy, many established and emerging high-tech companies had a fairly good year.

Some businesses, such as defense-related firms and software developers that tapped into cloud computing, reported substantial, and in some cases, spectacular growth.

Many venture-backed startups expanded their markets and signed new partnerships, setting themselves up for much more growth next year and beyond. And a number of companies obtained lucrative exits through mergers and acquisitions.

However, it was tragedy that attracted the most attention this year among Albuquerque’s high-tech-related businesses.

Emcore Corp. gripped the public spotlight on July 12, when Robert Reza, a former employee, stormed through one of the company’s facilities at the Sandia Science and Technology Park in southeast Albuquerque with a semi-automatic handgun. He killed three people, including himself, and wounded four others, leaving a traumatized work force at Emcore and nearby firms.

New Mexico has largely been spared that kind of extreme workplace violence. The Emcore shooting served as a wake-up call to many businesses to reinforce security and preparedness. Emcore and others at the park beefed up building and work force security with improved surveillance systems and employee training. Many firms revised management procedures to pre-empt future attacks.

More than 2,000 people work in 29 businesses at the park. That includes 350 at Emcore, which makes compound semiconductor components and subsystems for the broadband, fiber optic, satellite and terrestrial solar markets.

Notwithstanding the shootings, some park-based companies significantly expanded their facilities this year. Applied Technology Associates, an engineering firm with many large, defense-related contracts, grew its headquarters from 15,000 square feet to 41,000.

ATA specializes in providing precision sensing, measurement and control systems for high-tech weapons, such as lasers, and for aerospace applications, such as satellites. Company revenue grew from $15.2 million in 2007 to $40 million in 2009.

Sales remained flat this year at $40 million, but like many defense-related firms, ATA is poised for growth as the economy rebounds. ATA was one of two defense-related engineering firms invited to present at Albuquerque Economic Development’s quarterly luncheon Dec. 9. The other presenter, Applied Research Associates, also reported spectacular growth in recent years.

U.S. Department of Defense contracts account for nearly two-thirds of ARA’s work. Its revenue has doubled twice in the past decade, reaching $240 million in 2009. Chief Development Officer Frank Maestas said revenue grew another 12 percent this year and is on track to reach $1 billion by 2020.

The Boeing Co., another major defense contractor, decided to center all of its directed energy work in Albuquerque this year, reflecting the state’s growing reputation as an industry hub for developing lasers and high-powered microwave systems. The aerospace company, with headquarters in Chicago, employs nearly 80 percent of its 450 New Mexico-based workers in laser-related work, most of them in the military’s Airborne Laser Program, run from the U.S. Air Force Research Laboratory on Kirtland Air Force Base. During the summer, Boeing combined all of its airborne laser and directed energy business organizations into a single Directed Energy Systems team in Albuquerque. That could mean a lot more work for local companies, since Boeing has purchased more than $200 million in goods and services annually from New Mexico vendors in recent years.

Cloud computing provided new opportunities for software developers and system integrators in 2010. An emerging, national network of data centers that host and maintain computer systems for users means businesses no longer need to invest in expensive servers, hardware and technical staff to set up and maintain computer systems and networks.

Businesses now can pay monthly fees for virtual, or “cloud computing,” services. Still, they need providers to hook them up, or to operate the systems. Firms that provide such services reported significant growth.

Abba Technologies Inc., which used to focus exclusively on designing customized, in-house computer network systems for businesses, offers cloud computing from a data center Downtown. That has created a new, recurring revenue stream that the company estimates will account for 50 percent of its profits within five years.

Ardham Technologies Inc., which hooks local businesses up to national cloud-computing platforms and offers management services, expected revenue to reach $8.5 million this year, up from $4.7 million in 2009. It recently moved from a 1,200-square-foot office near Uptown to a 6,500-square-foot space Downtown.

Many venture capital-backed startups also reported a much better year than in 2009, when the recession forced many into bankruptcy. Among others:

• Aspen Avionics Inc. expected revenue to grow from $10 million last year to $15 million this year;
• Water purification firm MIOX Corp. signed a distribution partnership with a subsidiary of Fomento Económico Mexicano S.A.B. de C.V., Coca-Cola’s bottling partner for Latin America and the largest integrated beverage maker in the region;
• JackRabbit Systems Inc., which offers online lodging reservation services, has signed partnerships with 10 major hotel chains since the spring, including Best Western International Inc.;
• TheRetailPlanet.com., which offers a comprehensive international database of information on shopping centers and commercial properties, signed a partnership with The Nielsen Co., the global ratings giant; and
• New Mexico Software Inc., which offers web-based medical and general business systems software, reported a profit in the third quarter, its first in more than five years.

Four companies had profitable exits this year. Strategic Analytics Inc. in Santa Fe was sold to New Jersey-based Verisk Analytics Inc., Controlled Recovery Inc. in Hobbs was acquired by a group of investors, OpTerra Energy Group acquired Energy Control Inc. of Rio Rancho, and California-based National Technology Systems Inc. bought the Albuquerque engineering firm Mechtronic Solutions Inc.