More Cuts Possible At JDS Uniphase

Dow Jones’ Mild Cuts

RCN Bleeding Cash

NCR’s Move

Cash-Rich ITXC Finds New Markets

Total Research Sells But Stays

Crosstown Move

Consolidations

Deaths

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, Princeton

08543-5219.

Gregory Ellis, president and COO. 609-580-2500; fax, 609-580-2555.

Home page: www.impower.com

Top Of Page
More Cuts Possible At JDS Uniphase

The company founded by Greg Olson as Epitaxx, now a

part of the struggling JDS Uniphase, could have some more layoffs.

As of June, 285 of the 1,000 workers in West Trenton had been given

pink slips, says Jeff Wild, spokesperson for JDS Uniphase in San Jose.

"But it’s not a pure numbers game," he says. "It’s based

on what products you are making." Each division must cut until

it gets to its break-even point.

Like some of Princeton’s small but flourishing companies, this JDS

Uniphase division offers optoelectronics devices for fiber optics

communications networks (See page 45 for an article on Princeton

Optronics).

Globally, JDS Uniphase went from 29,000 people in 2000 to 20,000

workers

at the end of June. It announced on July 26 it would eliminate 7,000

more jobs worldwide — a 55 percent cutback over all.

JDS’ major clients, Nortel Networks and Lucent Technologies, are

considered

among the weakest of the optical system suppliers, and the latest

announcement indicates that the optical long-haul market is not going

to recover as fast as analysts had hoped. In fact JDS has set a

terrible

record — for the largest ever annual loss for a technology

company,

$50.6 billion or $46.30 per share. But the company predicts that its

lower overhead, after the cuts, will allow it to break even on $350

million in quarterly sales.

JDS Uniphase – EPITAXX Division (JDSU), 7 Graphics

Drive, West Trenton 08628. Alka Swanson, general manager.

609-538-1800;

fax, 609-538-8122. Home page: www.epitaxx.com

Top Of Page
Dow Jones’ Mild Cuts

The dotcom slowdown also hit companies that provide

ancillary services such as advertising. Crimped advertising budgets

are partially to blame for reductions at Dow Jones on Route 1 North.

Most newspapers have announced major staff cuts, pointing to both

rising newsprint prices and decreased advertising revenues — the

depressed IPO market resulted in fewer splashy ads. "With the

economy shrinking, firms are not advertising as much," says Steven

Goldstein, 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 were

buyouts and retirements but 347 people were involuntarily laid off.

No information is available, says Goldstein, on how many of the jobs

were taken from the South Brunswick campus, but 16 of the cuts were

from the 636-person Wall Street Journal staff.

Dow Jones & Company (DTX), Ridge Road and Route

1, Princeton 08543-0300. Dorothea Coccoli Palsho, vice president

strategic

marketing. 609-520-4000; fax, 609-520-4010. Home page:

www.dowjones.com

Top Of Page
RCN Bleeding Cash

Last December RCN had $2.6 billion in cash, with more

than half of that contributed by Paul Allen’s Vulcan Ventures. It

had lost $1 billion of its cash by June, and CEO David McCourt told

analysts last week that RCN is considering further cutbacks, although

he declined to say whether that meant layoffs.

Last year RCN lopped off 470 jobs nationally, including 100 at the

Carnegie Center headquarters. More than 1,273 people left the company

so far this year. At the Carnegie Center this year, 30 jobs have been

eliminated by attrition, says spokesperson Nancy Bavec.

The $1 billion figure included special charges for investments that

lost value, excess inventory, cancellation charges for the

construction

project on Princeton Pike, and costs for paying off laid-off

employees.

But the company has valuable infrastructure: It provides three-way

communication services — high speed Internet connections, local

and long distance phone, and cable television — to major

residential

markets in the United States.

RCN is not suffering alone. According to the Wall Street Journal (July

25) the "relatively small" telecom sector is "playing

an outsized role in driving the economy to its recent heights —

and now telecom’s surprising fall is a major factor holding back

recovery."

To this industry, says the WSJ, can be attributed "almost $2

trillion

in stock market wealth."

RCN Corporation (RCNC), 105 Carnegie Center, Suite

300, Princeton 08540. David C. McCourt, chairman and CEO.

609-734-3700;

fax, 609-734-7551. Home page: www.rcn.com

Top Of Page
NCR’s Move

In May NCR closed down the building that had held its

data processing operations — 10 acres and 20,000 square feet at

2031 Old Trenton Road — and moved the remaining employees, just

eight of them, to 3,100 square feet on Princess Road. These eight

workers now staff a customer service center. All of the data

processing

business that came to West Windsor starting in 1972 has gone to

Framingham,

Massachusetts.

The downsizing at the Old Trenton Road facility started in 1996.

Merrill

Lynch subleased some space there while it waited for its campus in

Hopewell to open.

Matt Malatich of CB Richard Ellis in Iselin represented NCR in the

Princess Road lease. Aubrey Haines — who recently left Trammell

Crow on Alexander Road — represents the Old Trenton Road property

for King Realty. The owners, Free Enterprise Associates, are looking

to lease or sell.

NCR Corporation (NCR), 4 Princess Road, Building

200, Suite 213, Lawrenceville 08648. Cesina M. Bell, senior business

analyst. 609-895-8900; fax, 609-895-8910.

Top Of Page
Cash-Rich ITXC Finds New Markets

In contrast to RCN’s struggles is the situation of ITXC

Corp. on College Road. Needing no infrastructure and being cash rich,

this telecom company continues on a successful expansion path despite

a basement level stock. As an international Internet telephony

services

carrier, ITXC routes telephone calls over the Internet, and trade

sources say it is now the seventh largest U.S.-based telephone company

selling international minutes. It competes with the likes of AT&T,

Worldcom, IDT, and Sprint, (who are in places one through four), and

has 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 my

house four years ago," says Mary Evslin. She and her CEO husband,

Tom Evslin, founded the company on Library Place in 1997. It began

service in April of 1998 and by the end of last month it had 559

"points

of presence" in more than 318 cities and 117 countries and had

routed its 2 billionth minute of paid voice traffic.

But the company stock is now trading at under $4. "A lot of our

clients and competitors are going under in these tough

circumstances,"

says Evslin. Instead, ITXC is expanding from just under 30,000 square

feet at 600 College Road to 70,000 feet in the new Aegis building

at 750 College Road. This year it will focus on taking over the

delivery

of long distance service in developing countries, starting with

Bolivia.

ITXC’s cash situation is partly due to good planning. "We have

no debt and no infrastructure," she says. "We are buying it

from the providers. It is what distinguishes us from everybody else.

We are selling the same thing that everybody above us on that list

is selling, but we have very low cost for long haul traffic."

When ITXC transmits phone-to-phone international calls over the

Internet

using its proprietary routing technology to achieve top quality, most

people are not aware of how their calls are being handled.

Good timing also contributed to ITXC’s balance sheet. When it went

public at $12 on Nasdaq on September 30, 1999, the stock shot up and

by February was arguably overvalued at $118. Hard on the heels of

the initial public offering the Evslins followed Wall Street advice

and went back to the market for a secondary offering in March 2000

when the stock was $85. That month techs started to decline. By June

it was $40. Had ITXC waited, it might be cash poor now.

"We had the opportunity to do our secondary offering right before

the market fell apart. Our bankers said — with no debt and that

kind of capital available — we should seize the opportunity,"

says Evslin. "We are very lucky, to have no debt and that kind

of 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 the

downturn

would be one month later."

ITXC’s current stock price is "bizarre," Evslin says, because

that means the company’s market cap is less than its cash on hand

($170 million in cash and cash equivalents). With cash, ITXC can buy

bargains. "The ramifications are so broad. Vendors are

offering us great deals on equipment and international advertising.

We can buy last minute booths at trade shows because people are going

into Chapter 11 before they can use them." The company lost 30

percent of its traffic due to failed carriers but has replaced the

business with other carriers.

Unsustainable debt loads caused the demise of many carriers and is

forcing the breakup of some of the largest carriers in the world.

Evslin believes that ITXC is one of only two major carriers with no

net debt. But telecom companies are not the current darlings of the

stock market. "Some people see us as a competitive carrier and

some as an Internet company, and neither is in favor," she says.

Still, the company is taking its lickings for a foundering investment

in E-commerce. It bought an Oregon-based firm, eFusion, so it could

bring cheap Internet-routed calls to the customer service industry,

yet that market has lagged behind expectations. So ITXC is cutting

45 to 55 jobs (only five on College Road) and taking a charge of $80

million to $100 million.

"If you are a big company you’ve got to have feelers in all

directions,"

explains Evslin. "We thought the enhanced services is where the

industry would go in the not too distant future, and it turns out

it is longer in the future than we thought. Now we are focusing more

on the developing world. The World Bank and the European Union are

putting great pressure on old government monopoly phone companies

to bring the prices down. But with the capital markets so low, they

can’t borrow money."

"Since we do have the cash and the relationships all over the

world, we can go to a country like Bolivia and offer to outsource

the whole operation of the long distance network. They do the `local

loop’ (local calls) and the customer marketing." She predicts

ITXC’s client telecoms will eventually take over their own domestic

long distance and the more profitable international routes and leave

the less profitable calls to ITXC.

"Bolivia is the only incumbent local exchange carrier (ILEC) that

we have signed at the moment," says Evslin, "and we are trying

to take that model to other developing nations." Third World

countries,

she points out, are not used to operating under the rules of

competitive

pricing. "It’s a mindset. We can give them that."

— Barbara Fox

ITXC 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.com

Top Of Page
Total Research Sells But Stays

Market research firm Total Research, with offices at

5 Independence Way, has agreed to merge with Harris Interactive, the

Rochester, New York-based company known for its Harris Polls of public

opinion. Pending approval by regulators and stock holders of each

company, Total Research will become a wholly-owned subsidiary of

Harris,

which will exchange 1.222 shares of its stock for each share of Total

Research’s stock.

The merged company will have 1,000 employees. No job cuts are expected

from either company, and Total Research will remain at its 5

Independence

Way offices. Al Angrisani, currently president and CEO of Total

Research,

will become president and COO of the merged company, which will be

headed by Gordon S. Black, currently chairman and CEO of Harris

Interactive.

Top Of Page
Crosstown Move

Siemens Carrier Networks LLC, 202 Carnegie Center,

Suite 204, Princeton 08540. Carol Mandeville, executive assistant

sales. 609-716-7682; fax, 609-275-8659. Home page:

www.icn.siemens.com

Siemens’ telecommununications sales and service offices moved from

the Siemens Corporate Research building on College Road to the

Carnegie

Center. With AT&T as its chief client, this six-person office provides

data 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 Page
Consolidations

Intercollegiate Tennis Association, 174 Tamarack

Circle, Skillman 08558. David Benjamin, executive director.

609-497-6920;

fax, 609-497-9766. Www.itatennis.com

College Golf Foundation, 174 Tamarack Circle,

Skillman

08558. 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 Foundation

and the Intercollegiate Tennis Association, moved from separate spaces

at 33 State Road to shared space at Montgomery Knoll. For ITA, it

was an expansion, and for the golf foundation, a chance to refocus

its efforts.

In previous years the golf foundation had networked and publicized

the 200-event Rolex Collegiate Tour. "We are not going to be

involved

in developing tournaments this year," says Nancy Breo, the golf

foundation administrator. A 1972 graduate of Northern Illinois

University,

she started the foundation in 1995. "We tried to find a niche

that would add something new to the world of college golf. I am

scaling

down our operations slightly and will concentrate on developing our

awards programs." Among them: The Rolex Achievement Award and

the MasterCard Graduate Scholarship Award.

David Benjamin, the managing director of the tennis association, has

expanded to six employees. The 2,200-member organization administers

college tournaments and ranking systems. "We need different space

to 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 resources

consulting

and software firm has changed its name to Kenexa and consolidated

its two New Jersey locations, moving from Research Park to 3131

Princeton

Pike. Headquartered in Wayne, Pennsylvania, it has 550 employees

worldwide

and 35 to 40 here.

"A significant portion of our staff is housed in New Jersey, and

we have a continued commitment to our presence in the state,"

says Elliot Clark, the COO and former head of Raymond Karsan’s

pharmaceutical

practice.

Top Of Page
Deaths

Stuart Surick , 51, on July 22. He had a law practice on

Nottingham Way and was a Juilliard-trained concert pianist.

Alexander B. Douglas , 64, on July 29. He was a systems

analyst at the Hibbert Group in Trenton.

Howard Fish Jr. , 72, on July 29. He was chaplain of the

Lawrenceville School from 1969 to 1988

Richard E. Honig , 84, died July 31. A physicist, he was

on the staff of the David Sarnoff Research Center from 1950 to 1987.

Dr. Bernard Choe , 68, on August 1. He founded a holistic

and mental health center, the Heartland Clinic in Trenton.

Alfred Pietrinferno Jr. , 58, on August 1. A certified

public accountant, he had an office at Research Park and was in

partnership

with his son, A.J. Pietrinferno.

Memorial Set

A funeral for George Pauk will be held Saturday, August

11, at 9:30 a.m. in St. Paul’s Church in Princeton. Pauk, 69, a Roszel

Road attorney, died July 12.


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