An overall economic downturn has demonstrated itself quite clearly through the demise, acquisition, and reduced profits of some of Rhode Island’s most prominent technology companies.
During the last three months alone, the state has seen one company — Mesa Systems Guild — close its doors, another – eBT International -outline plans for an August liquidation, and three others — DefendNet Solutions, Network Six and CollegeLink.com Inc.– folded into other companies.
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The larger players in Rhode Island’s admittedly small technology sector, such as GTECH Holdings Corp. and American Power Conversion, have posted lower profits in their first quarters. APC, in fact, has resorted to cutting jobs. Here’s a look at some of the companies.
APC
Power protection equipment maker American Power Conversion, based in West Kingston, laid off 300 employees, or 4 percent of its workforce, in the first quarter, and said in May it plans to cut an additional 200 jobs in the second.
The company’s first quarter earnings decreased 42 percent — $27.2 million, compared to $47.1 million, during the year-ago period. APC attributed the decline to the economic slowdown and decrease in technology spending.
At the end of May, APC announced plans to open a manufacturing plant in Brazil.
CollegeLink
This Middletown company, with some 60 employees, completed its acquisition by
TMP, parent company of Monster.com, on June 20. According to a company spokesman,
although the majority of CollegeLink’s employees work out of offices in Cincinnati,
there are between 10 and 15 workers in Rhode Island. He had no information on
the number of jobs affected by the acquisition.
DefendNet Solutions
DefendNet Solutions, a Providence-based Internet security firm, was acquired by
the barely year-old security and privacy firm Guardent, of Waltham, Mass.
Financial details of the deal were not disclosed. However, as part of the deal, DefendNet co-founders Vincent Giordano and Sean Amaral agreed to leave the company, and 15 to 20 other employees from the human resources, marketing and finance departments were also let go.
Guardent plans to move its primary security facility to Providence, relocating 10 of its 65 Waltham employees in the process.
eBT International
In May, Web content management solutions company eBT announced its board of directors
had voted unanimously to dissolve and liquidate the company, subject to the approval
of majority shareholders (the board plans to meet next month).
Providence-based eBT, which employed 156 people worldwide, including 115 in Rhode Island, laid most of its workers off at the time of its announcement, though it did say it would honor all contracts for work it agreed to perform.
GTECH
GTECH Holdings Corp., the lottery company with some 4,700 employees worldwide,
997 of whom work in Rhode Island, has renewed lottery contracts with Rhode Island,
Louisiana, and Poland within the last six months. It has also appointed a new
chief executive, Howard Cohen, who said he expects the company to grow slowly,
but continue profitability.
Mesa Systems Guild
Warwick-based Mesa Systems Guild, a privately held software company, closed in
April, leaving behind 25 employees and $700,000 in debt.
Mesa’s product, mesaVista software, was an Internet-based tool designed for engineers working on product development. Clients — including Lockheed Martin, Lucent Technologies and MediaOne Group, Inc. — could exchange information via Mesa’s Intranet.
Mesa, which drew some $7 million in venture capital investments, ultimately decided to secure its $700,000 debt through the intellectual property of the company. PNC Venture Bank now owns the code of mesaVista, customer contacts, and the selling rights.
Nestor
Fraud detection software company Nestor, which in January engineered a loan of
up to $4 million for its 35 percent-owned affiliate, Nestor Traffic Systems (NTS),
also announced at that time a plan to merge with NTS.
NTS, a maker of video-based traffic monitoring systems, was spun off from Nestor in 1997. According to a statement issued by Nestor in January, a re-combination of the affiliates would bring the company the funds it needs to expand its product penetration and aid the equipment lease financing it needs to sustain its capital investment program.
Network Six
Warwick-based Network Six, an information technology solutions company that specialized
in systems for government sector human services programs, announced last month
it was being acquired by TRW, Inc., a global company whose businesses include
information technology systems. The deal is subject to Network Six shareholder
approval.
Overall climate, and where we’re headed
Andy van Dam, co-founder of Brown University’s computer sciences program, is more
than a little bit troubled by the rash of bad news.
“Things certainly don’t look very rosy,” he said. With the closing of eBT, the
sale of DefendNet and Network Six, it’s “not just weeding out of bad companies
that’s going on, it’s the inability of good companies to get proper funding.”
Rick Kovar, director of the Rhode Island Technology Council (RItech), expressed a much more positive view of the tech climate. What van Dam said about the reluctance of investors is true, he said, but Rhode Island has an IT community that hasn’t gained a lot of exposure. “The biggest problem is that the industry is not aware of itself in Rhode Island,” Kovar asserted.
But he is enthusiastic about his organization’s initiatives, including an index of tech businesses within the state.
The index will begin with information gathered from RItech’s members — some 220, ranging from telecommunications companies to companies with a large, embedded IT department, such as CVS and Citizens Bank — but ultimately aims to describe all technology companies here.
Another important development is the formation of a legislative committee — which met for the first time on June 26 — that will come up with a legislative agenda, testify on bills, and invite legislators to RItech member companies. “It’s up to us to educate our legislators,” he said.
