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This article was prepared for the August 8, 2001 edition of U.S. 1
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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
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
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
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
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
solution. Plus, the North Brunswick-based Datamark Technologies, which
has customer loyalty programs for brick and mortar firms, is operating
If Impower can indeed maintain day-to-day business operations as it
plans, its woes will have minimal effect on the endeavors and
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
— 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
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
The economic downturn, the softened advertising environment, the
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
"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.
Gregory Ellis, president and COO. 609-580-2500; fax, 609-580-2555.
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
Globally, JDS Uniphase went from 29,000 people in 2000 to 20,000
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
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
record — for the largest ever annual loss for a technology
$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.
Drive, West Trenton 08628. Alka Swanson, general manager.
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.
1, Princeton 08543-0300. Dorothea Coccoli Palsho, vice president
marketing. 609-520-4000; fax, 609-520-4010.
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
project on Princeton Pike, and costs for paying off laid-off
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
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
To this industry, says the WSJ, can be attributed "almost $2
in stock market wealth."
300, Princeton 08540. David C. McCourt, chairman and CEO.
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
business that came to West Windsor starting in 1972 has gone to
The downsizing at the Old Trenton Road facility started in 1996.
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.
200, Suite 213, Lawrenceville 08648. Cesina M. Bell, senior business
analyst. 609-895-8900; fax, 609-895-8910.
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
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
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
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
of long distance service in developing countries, starting with
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
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
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
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
she points out, are not used to operating under the rules of
pricing. "It’s a mindset. We can give them that."
— Barbara Fox
750 College Road East, Princeton 08540. Tom Evslin, CEO. 609-419-1500;
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
which will exchange 1.222 shares of its stock for each share of Total
The merged company will have 1,000 employees. No job cuts are expected
from either company, and Total Research will remain at its 5
Way offices. Al Angrisani, currently president and CEO of Total
will become president and COO of the merged company, which will be
headed by Gordon S. Black, currently chairman and CEO of Harris
Suite 204, Princeton 08540. Carol Mandeville, executive assistant
sales. 609-716-7682; fax, 609-275-8659.
Siemens’ telecommununications sales and service offices moved from
the Siemens Corporate Research building on College Road to the
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.
Circle, Skillman 08558. David Benjamin, executive director.
08558. Nancy Breo, administrator. 609-252-1561; fax, 609-252-1587.
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
In previous years the golf foundation had networked and publicized
the 200-event Rolex Collegiate Tour. "We are not going to be
in developing tournaments this year," says Nancy Breo, the golf
foundation administrator. A 1972 graduate of Northern Illinois
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
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.
Suite 200, Lawrenceville 08540. Kevin Kruse, principal. 609-896-8404.
Once known as Raymond Karsan Associates, this human resources
and software firm has changed its name to Kenexa and consolidated
its two New Jersey locations, moving from Research Park to 3131
Pike. Headquartered in Wayne, Pennsylvania, it has 550 employees
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
Nottingham Way and was a Juilliard-trained concert pianist.
analyst at the Hibbert Group in Trenton.
Lawrenceville School from 1969 to 1988
on the staff of the David Sarnoff Research Center from 1950 to 1987.
and mental health center, the Heartland Clinic in Trenton.
public accountant, he had an office at Research Park and was in
with his son, A.J. Pietrinferno.
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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