More Cuts Possible At JDS Uniphase
Cash-Rich ITXC Finds New Markets
Total Research Sells But Stays
Corrections or additions?
This article was prepared for the August 8, 2001 edition of U.S. 1
Newspaper. All rights reserved.
Life in the Fast Lane
The continued decline in the technology sector has
had varying effects. Just this week Dataram, the manufacturer of
computer memory upgrade cards headquartered at 186
Princeton-Hightstown
Road, announced the layoff of nearly 100 workers — down to about
280. The majority of the employees are at the firm’s manufacturing
facility in Bucks County.
The most dramatic turnaround in the greater Princeton business
community
may be the case of Impower, a spinoff of American List Counsel, which
tried to buck the dotcom downturn by pressing full speed ahead. It
has just declared Chapter 11 bankruptcy but will keep operating while
it restructures.
Impower is an E-marketing company that fell prey to overly optimistic
projections for E-commerce growth. In January American List Counsel
and Impower took 110,000 square feet at the new building on the Dow
Jones campus. Buttressed by a total of $42 million in venture capital,
Impower grew from 20 to 120 employees (U.S. 1, February 21). According
to a Trenton Times report, it has laid off more than half its staff,
and has fewer than 50 employees at its headquarters on the Dow Jones
campus.
Still, Impower has solid products for the digital advertising dollars
that remain, says Greg Ellis, Impower’s president. Major clients are
using Impower’s E-mail database program and its outsourced mail
distribution
solution. Plus, the North Brunswick-based Datamark Technologies, which
has customer loyalty programs for brick and mortar firms, is operating
normally.
If Impower can indeed maintain day-to-day business operations as it
plans, its woes will have minimal effect on the endeavors and
reputation
of American List Counsel, billed as the largest direct marketing list
broker/manager in the nation. One of Impower’s lenders has agreed
to provide financing so that the company can continue to pay the
suppliers
— the list owners and trade vendors — that also sell to ALC.
ALC recently landed a contract to broker and manage the Wall Street
Journal’s lists and manage Barron’s subscriber file.
“Our customers realize the importance of the interactive marketing
channel,” says Ellis, “and we are committed to our mission
of providing these leading marketers with cost effective customer
acquisition and customer development solutions.”
In May of this year Ellis was brought in to turn Impower around. He
is a 1977 graduate of Carnegie Mellon and has an MBA from that school.
From 1995 to 2000 he was COO and group CEO at Opinion Research
Corporation,
and then left in 2000 to build the research division of DoubleClick.
(His parents live in Princeton and his father, William Ellis, runs
the executive education firm called University Associates of
Princeton.)
The economic downturn, the softened advertising environment, the
winnowing
out of Internet customers, and an overbuilt infrastructure — these
factors eroded Impower’s balance sheet, says Ellis. “Like lots
of Internet companies, this one raised quite a bit of capital and
built out an infrastructure in anticipation of a very large business
and grew very rapidly for some time,” says Ellis. “As with
lots of dotcom companies, lots of our customers vaporized. But we
have the core of a healthy business, just nowhere near as large as
anticipated.”
“Clearly the situation that I found myself in was that, unless
we made some very hard decisions very quickly, we weren’t going to
have any company,” says Ellis.
Impower, 4300 Route 1, CN 5219, Princeton08543-5219.Gregory Ellis, president and COO. 609-580-2500; fax, 609-580-2555.Home page: www.impower.comTop Of PageMore Cuts Possible At JDS UniphaseThe company founded by Greg Olson as Epitaxx, now apart of the struggling JDS Uniphase, could have some more layoffs.As of June, 285 of the 1,000 workers in West Trenton had been givenpink slips, says Jeff Wild, spokesperson for JDS Uniphase in San Jose.”But it’s not a pure numbers game,” he says. “It’s basedon what products you are making.” Each division must cut untilit gets to its break-even point.Like some of Princeton’s small but flourishing companies, this JDSUniphase division offers optoelectronics devices for fiber opticscommunications networks (See page 45 for an article on PrincetonOptronics).Globally, JDS Uniphase went from 29,000 people in 2000 to 20,000workersat the end of June. It announced on July 26 it would eliminate 7,000more jobs worldwide — a 55 percent cutback over all.JDS’ major clients, Nortel Networks and Lucent Technologies, areconsideredamong the weakest of the optical system suppliers, and the latestannouncement indicates that the optical long-haul market is not goingto recover as fast as analysts had hoped. In fact JDS has set aterriblerecord — for the largest ever annual loss for a technologycompany,$50.6 billion or $46.30 per share. But the company predicts that itslower overhead, after the cuts, will allow it to break even on $350million in quarterly sales.JDS Uniphase – EPITAXX Division (JDSU), 7 GraphicsDrive, West Trenton 08628. Alka Swanson, general manager.609-538-1800;fax, 609-538-8122. Home page: www.epitaxx.comTop Of PageDow Jones’ Mild CutsThe dotcom slowdown also hit companies that provideancillary services such as advertising. Crimped advertising budgetsare partially to blame for reductions at Dow Jones on Route 1 North.Most newspapers have announced major staff cuts, pointing to bothrising newsprint prices and decreased advertising revenues — thedepressed IPO market resulted in fewer splashy ads. “With theeconomy shrinking, firms are not advertising as much,” says StevenGoldstein, vice president of corporate communications at Dow Jones.His company cut five percent of its workers, a smaller percentage,he says, than at other media firms.Dow Jones has eliminated a total of 429 jobs since January. Some werebuyouts and retirements but 347 people were involuntarily laid off.No information is available, says Goldstein, on how many of the jobswere taken from the South Brunswick campus, but 16 of the cuts werefrom the 636-person Wall Street Journal staff.Dow Jones & Company (DTX), Ridge Road and Route1, Princeton 08543-0300. Dorothea Coccoli Palsho, vice presidentstrategicmarketing. 609-520-4000; fax, 609-520-4010. Home page:www.dowjones.comTop Of PageRCN Bleeding CashLast December RCN had $2.6 billion in cash, with morethan half of that contributed by Paul Allen’s Vulcan Ventures. Ithad lost $1 billion of its cash by June, and CEO David McCourt toldanalysts last week that RCN is considering further cutbacks, althoughhe declined to say whether that meant layoffs.Last year RCN lopped off 470 jobs nationally, including 100 at theCarnegie Center headquarters. More than 1,273 people left the companyso far this year. At the Carnegie Center this year, 30 jobs have beeneliminated by attrition, says spokesperson Nancy Bavec.The $1 billion figure included special charges for investments thatlost value, excess inventory, cancellation charges for theconstructionproject on Princeton Pike, and costs for paying off laid-offemployees.But the company has valuable infrastructure: It provides three-waycommunication services — high speed Internet connections, localand long distance phone, and cable television — to majorresidentialmarkets in the United States.RCN is not suffering alone. According to the Wall Street Journal (July25) the “relatively small” telecom sector is “playingan outsized role in driving the economy to its recent heights —and now telecom’s surprising fall is a major factor holding backrecovery.”To this industry, says the WSJ, can be attributed “almost $2trillionin stock market wealth.”RCN Corporation (RCNC), 105 Carnegie Center, Suite300, Princeton 08540. David C. McCourt, chairman and CEO.609-734-3700;fax, 609-734-7551. Home page: www.rcn.comTop Of PageNCR’s MoveIn May NCR closed down the building that had held itsdata processing operations — 10 acres and 20,000 square feet at2031 Old Trenton Road — and moved the remaining employees, justeight of them, to 3,100 square feet on Princess Road. These eightworkers now staff a customer service center. All of the dataprocessingbusiness that came to West Windsor starting in 1972 has gone toFramingham,Massachusetts.The downsizing at the Old Trenton Road facility started in 1996.MerrillLynch subleased some space there while it waited for its campus inHopewell to open.Matt Malatich of CB Richard Ellis in Iselin represented NCR in thePrincess Road lease. Aubrey Haines — who recently left TrammellCrow on Alexander Road — represents the Old Trenton Road propertyfor King Realty. The owners, Free Enterprise Associates, are lookingto lease or sell.NCR Corporation (NCR), 4 Princess Road, Building200, Suite 213, Lawrenceville 08648. Cesina M. Bell, senior businessanalyst. 609-895-8900; fax, 609-895-8910.Top Of PageCash-Rich ITXC Finds New MarketsIn contrast to RCN’s struggles is the situation of ITXCCorp. on College Road. Needing no infrastructure and being cash rich,this telecom company continues on a successful expansion path despitea basement level stock. As an international Internet telephonyservicescarrier, ITXC routes telephone calls over the Internet, and tradesources say it is now the seventh largest U.S.-based telephone companyselling international minutes. It competes with the likes of AT&T,Worldcom, IDT, and Sprint, (who are in places one through four), andhas edged ahead of eighth-place Williams Communications Solutions,the former Bell Atlantic Meridian.”We think that’s darn good, when you consider we started in myhouse four years ago,” says Mary Evslin. She and her CEO husband,Tom Evslin, founded the company on Library Place in 1997. It beganservice in April of 1998 and by the end of last month it had 559″pointsof presence” in more than 318 cities and 117 countries and hadrouted its 2 billionth minute of paid voice traffic.But the company stock is now trading at under $4. “A lot of ourclients and competitors are going under in these toughcircumstances,”says Evslin. Instead, ITXC is expanding from just under 30,000 squarefeet at 600 College Road to 70,000 feet in the new Aegis buildingat 750 College Road. This year it will focus on taking over thedeliveryof long distance service in developing countries, starting withBolivia.ITXC’s cash situation is partly due to good planning. “We haveno debt and no infrastructure,” she says. “We are buying itfrom the providers. It is what distinguishes us from everybody else.We are selling the same thing that everybody above us on that listis selling, but we have very low cost for long haul traffic.”When ITXC transmits phone-to-phone international calls over theInternetusing its proprietary routing technology to achieve top quality, mostpeople are not aware of how their calls are being handled.Good timing also contributed to ITXC’s balance sheet. When it wentpublic at $12 on Nasdaq on September 30, 1999, the stock shot up andby February was arguably overvalued at $118. Hard on the heels ofthe initial public offering the Evslins followed Wall Street adviceand went back to the market for a secondary offering in March 2000when the stock was $85. That month techs started to decline. By Juneit was $40. Had ITXC waited, it might be cash poor now.”We had the opportunity to do our secondary offering right beforethe market fell apart. Our bankers said — with no debt and thatkind of capital available — we should seize the opportunity,”says Evslin. “We are very lucky, to have no debt and that kindof capital to grow ourselves with. The market at that time was saying`Go for it while we can.’ But I don’t think anybody thought thedownturnwould be one month later.”ITXC’s current stock price is “bizarre,” Evslin says, becausethat means the company’s market cap is less than its cash on hand($170 million in cash and cash equivalents). With cash, ITXC can buybargains. “The ramifications are so broad. Vendors areoffering us great deals on equipment and international advertising.We can buy last minute booths at trade shows because people are goinginto Chapter 11 before they can use them.” The company lost 30percent of its traffic due to failed carriers but has replaced thebusiness with other carriers.Unsustainable debt loads caused the demise of many carriers and isforcing the breakup of some of the largest carriers in the world.Evslin believes that ITXC is one of only two major carriers with nonet debt. But telecom companies are not the current darlings of thestock market. “Some people see us as a competitive carrier andsome as an Internet company, and neither is in favor,” she says.Still, the company is taking its lickings for a foundering investmentin E-commerce. It bought an Oregon-based firm, eFusion, so it couldbring cheap Internet-routed calls to the customer service industry,yet that market has lagged behind expectations. So ITXC is cutting45 to 55 jobs (only five on College Road) and taking a charge of $80million to $100 million.”If you are a big company you’ve got to have feelers in alldirections,”explains Evslin. “We thought the enhanced services is where theindustry would go in the not too distant future, and it turns outit is longer in the future than we thought. Now we are focusing moreon the developing world. The World Bank and the European Union areputting great pressure on old government monopoly phone companiesto bring the prices down. But with the capital markets so low, theycan’t borrow money.””Since we do have the cash and the relationships all over theworld, we can go to a country like Bolivia and offer to outsourcethe whole operation of the long distance network. They do the `localloop’ (local calls) and the customer marketing.” She predictsITXC’s client telecoms will eventually take over their own domesticlong distance and the more profitable international routes and leavethe less profitable calls to ITXC.”Bolivia is the only incumbent local exchange carrier (ILEC) thatwe have signed at the moment,” says Evslin, “and we are tryingto take that model to other developing nations.” Third Worldcountries,she points out, are not used to operating under the rules ofcompetitivepricing. “It’s a mindset. We can give them that.”— Barbara FoxITXC Corp. (Internet Telephony Exchange Carrier)(ITXC),750 College Road East, Princeton 08540. Tom Evslin, CEO. 609-419-1500;fax, 609-419-1511. Home page: www.itxc.comTop Of PageTotal Research Sells But StaysMarket research firm Total Research, with offices at5 Independence Way, has agreed to merge with Harris Interactive, theRochester, New York-based company known for its Harris Polls of publicopinion. Pending approval by regulators and stock holders of eachcompany, Total Research will become a wholly-owned subsidiary ofHarris,which will exchange 1.222 shares of its stock for each share of TotalResearch’s stock.The merged company will have 1,000 employees. No job cuts are expectedfrom either company, and Total Research will remain at its 5IndependenceWay offices. Al Angrisani, currently president and CEO of TotalResearch,will become president and COO of the merged company, which will beheaded by Gordon S. Black, currently chairman and CEO of HarrisInteractive.Top Of PageCrosstown MoveSiemens Carrier Networks LLC, 202 Carnegie Center,Suite 204, Princeton 08540. Carol Mandeville, executive assistantsales. 609-716-7682; fax, 609-275-8659. Home page:www.icn.siemens.comSiemens’ telecommununications sales and service offices moved fromthe Siemens Corporate Research building on College Road to theCarnegieCenter. With AT&T as its chief client, this six-person office providesdata and voice network infrastructure for enterprises and carriers.It is headquartered in Boca Raton, Florida. Jon Marks of Cushman &Wakefield found the space.Top Of PageConsolidationsIntercollegiate Tennis Association, 174 TamarackCircle, Skillman 08558. David Benjamin, executive director.609-497-6920;fax, 609-497-9766. Www.itatennis.comCollege Golf Foundation, 174 Tamarack Circle,Skillman08558. Nancy Breo, administrator. 609-252-1561; fax, 609-252-1587.Www.collegesportsnews.com/cgf/cgf.htm.On July 31 two collegiate sports groups, the College Golf Foundationand the Intercollegiate Tennis Association, moved from separate spacesat 33 State Road to shared space at Montgomery Knoll. For ITA, itwas an expansion, and for the golf foundation, a chance to refocusits efforts.In previous years the golf foundation had networked and publicizedthe 200-event Rolex Collegiate Tour. “We are not going to beinvolvedin developing tournaments this year,” says Nancy Breo, the golffoundation administrator. A 1972 graduate of Northern IllinoisUniversity,she started the foundation in 1995. “We tried to find a nichethat would add something new to the world of college golf. I amscalingdown our operations slightly and will concentrate on developing ourawards programs.” Among them: The Rolex Achievement Award andthe MasterCard Graduate Scholarship Award.David Benjamin, the managing director of the tennis association, hasexpanded to six employees. The 2,200-member organization administerscollege tournaments and ranking systems. “We need different spaceto make us more efficient,” says a spokesperson.Kenexa Inc., 3131 Princeton Pike, Building 2 B,Suite 200, Lawrenceville 08540. Kevin Kruse, principal. 609-896-8404.Home page: www.kenexa.com.Once known as Raymond Karsan Associates, this human resourcesconsultingand software firm has changed its name to Kenexa and consolidatedits two New Jersey locations, moving from Research Park to 3131PrincetonPike. Headquartered in Wayne, Pennsylvania, it has 550 employeesworldwideand 35 to 40 here.”A significant portion of our staff is housed in New Jersey, andwe have a continued commitment to our presence in the state,”says Elliot Clark, the COO and former head of Raymond Karsan’spharmaceuticalpractice.Top Of PageDeathsStuart Surick , 51, on July 22. He had a law practice onNottingham Way and was a Juilliard-trained concert pianist.Alexander B. Douglas , 64, on July 29. He was a systemsanalyst at the Hibbert Group in Trenton.Howard Fish Jr. , 72, on July 29. He was chaplain of theLawrenceville School from 1969 to 1988Richard E. Honig , 84, died July 31. A physicist, he wason the staff of the David Sarnoff Research Center from 1950 to 1987.Dr. Bernard Choe , 68, on August 1. He founded a holisticand mental health center, the Heartland Clinic in Trenton.Alfred Pietrinferno Jr. , 58, on August 1. A certifiedpublic accountant, he had an office at Research Park and was inpartnershipwith his son, A.J. Pietrinferno.Memorial SetA funeral for George Pauk will be held Saturday, August11, at 9:30 a.m. in St. Paul’s Church in Princeton. Pauk, 69, a RoszelRoad attorney, died July 12.Next StoryCorrections or additions?This page is published by PrincetonInfo.com— the web site for U.S. 1 Newspaper in Princeton, New Jersey.
