College Savings Sold

Self-Teaching Call Center Software

EPAM expands

Expansions

Stock News

Deaths

Corrections or additions?

These articles by Kathleen McGinn Spring and Barbara Fox were prepared for the August 7, 2002 edition of U.S. 1 Newspaper. All rights reserved.

Life in the Fast Lane

In a relentlessly brutal climate for telecommunications,

it appears that one Central New Jersey player has pulled off a win.

Princeton Lightwave (PLI), a three-year-old company born in Sarnoff’s

labs, has bought time to wait out the telecom drought through a sale

of some of its assets to the TRUMPF Group, a multinational, privately-held

company based in Ditzingen, Germany.

At the same time, TRUMPF Photonics, a new company, banking on growth,

has arrived in Cranbury.

Louis Wagman, formerly chief operating officer of PLI, has been named

vice president and general manager of TRUMPF Photonics. A wholly-owned

TRUMPF subsidiary, the new company was formed to manufacture industrial

semiconductor lasers in the facility in which PLI will continue to

develop and market optoelectronic components and subsystems for the

telecommunications industry.

"This deal is favorable for all parties," says Wagman, who

was brought in by Sarnoff as a consultant some three years ago to

set up Princeton Lightwave as a free-standing company. He began talks

with TRUMPF some 10 months ago. The deal closed on July 17.

"The trend in telecommunications, because of the difficult market,

has been to become fabless," says Wagman. "That was PLI’s

strategy and the basis for this transaction. To be `fabless’,"

he explains, is to develop and market technology, but to subcontract

the manufacturing to someone else. From now on, TRUMPF will manufacture

PLI’s products — chips the size of an underweight grain of rice

— as well as its own products.

In addition to taking over PLI’s manufacturing plant on Route 130

South in Cranbury, TRUMPF has acquired the intellectual property it

needs to turn out its semiconductor lasers. This intellectual property

includes technology Princeton Lightwave brought with it from Sarnoff,

which retained an interest in the company, and technology it has developed

since establishing itself as an independent company. TRUMPF purchased

PLI intellectual property that relates to industrial and some medical

products, while PLI retains intellectual property that relates to

telecommunications products.

As for human assets, TRUMPF has hired 21 of PLI’s 38 employees, while

17 employees will stay with PLI. Didier Le Lannic, the third CEO PLI

has had in its short life, remains in that position.

Wagman will oversee day-to-day operations at TRUMPF Photonics. He

reports to Peter Leibinger, president of the newly-formed company,

and chairman and CEO of TRUMPF’s North American operation, which has

headquarters in Farmington, Connecticut.

Photonics is a new field for TRUMPF, a company with 5,500 employees,

$1.09 billion in annual sales, and roots in old economy manufacturing.

Leibinger’s father, Professor Berthold Leibinger, began his working

life as an apprentice tool maker with the company. After moving to

the United States and earning a college degree, he returned to Germany

to work for TRUMPF, which didn’t spell its name all in caps back then,

in the decade following the second World War.

Wagman recounts how the senior Leibinger invented and patented the

machine tools that fueled the growth of TRUMPF. The company’s founder

asked him if he would take his pay in stock, which he did, eventually

owning all of the stock and running the company. He is now manager

of the worldwide operations of TRUMPF, which has evolved from a manufacturer

of sheet metal presses to the market leader in industrial lasers used

for cutting, welding, and stamping the materials used in turning out

everything from airplanes and automobiles to motorcycles and mascara

cases.

The acquisition of PLI’s manufacturing equipment, along with some

of its skilled employees and intellectual property, adds semiconductor

laser capability to TRUMPF’s dominance in solid state lasers.

Meanwhile, PLI, which will continue to operate as an independent entity,

developing and marketing telecommunication products, has also entered

into a technology transfer strategic alliance with newly-formed TRUMPF

Photonics.

As a privately-held, family-owned company, TRUMPF is under no obligation

to disclose financial details of its purchase, and Wagman declines

to do so. He does say, however, that the both Sarnoff and PLI are

pleased with the terms.

Wagman, too, is a happy man. Just before joining Sarnoff to write

a business plan for PLI and to get the fledgling on its feet, he had

been head of AMP’s optoelectronic business. When Tyco acquired AMP,

he left, a decision that has only come to look better and better.

A graduate of George Washington University (Class of 1964) with an

MBA from the University of Michigan, Wagman lives in Princeton with

his wife, Naomi Pliskow, a physician now working as a medical writer

for Excerpta Medica in Belle Mead. The couple has two daughters, a

D.C. attorney and a violinist about to start graduate studies at the

Eastman School.

Wagman recently celebrated his 60th birthday with a family outing

to the eastern shore of Maryland that included a 10K race. He ran

with his daughters and his son-in-law, coming in third in his age

category. "I can run long," he says, "but I’m not fast."

So the win was exciting. As he waited — and waited — for his

name to appear on the winners’ board, the race organizers were looking

for one Lois Wagman to step forward to claim first prize in the women’s

over-60 age category.

"They had it wrong, it wasn’t `Lois,’ it was `Louis,’" Wagman

says with a laugh. The mix-up resolved, Wagman walked off a winner,

with a medal to prove it. In the TRUMPF/PLI deal "it was truly

a win-win-win case," he says. In his opinion both companies —

along with Sarnoff, PLI’s progenitor — racked up considerable

gains.

While there were three winners, for PLI the deal may have been a matter

of life and death. "Without this," says Wagman, "it would

have been very difficult for PLI financially. They would have struggled.

This will give them a new lease on life."

— Kathleen McGinn Spring

Princeton Lightwave Inc., 2601 Route 130 South,

Cranbury 08512. Didier J. Le Lannic, president and CEO. 609-925-8100;

fax, 609-409-7022. Home page: www.princetonlightwave.com

Top Of Page
College Savings Sold

College Savings Bank, pioneer of a savings program aimed

at arming youngsters with money for higher education, has been acquired

by Pacific Life Insurance Company of Newport Beach, California.

College Savings, with offices at 5 Vaughn Drive and a staff of 17,

was founded by Peter Roberts in 1987. It has assets of $260 million.

Its investment vehicle, CollegeSure CD, is marketed to parents and

grandparents worried about what inflation will do to college tuition

by the time their children are ready to enroll. The CDs index their

returns to college inflation rates.

As of press time, calls to College Savings about the company’s future

in this area had not been returned. A spokesman for Pacific Life said,

in a phone interview, that College Savings will retain its staff and

its presence in the Princeton area, and that Roberts will remain with

the company. Financial details were not disclosed.

Last month the bank reported Tier 1 regulatory capital of approximately

$18.4 million. The required capital-to-risk-weighted-asset ratio is

four percent, but CSB enjoys a ratio of 113 percent. The CDs are insured

by the Federal Deposit Insurance Corporation for up to $100,000 per

depositor.

Roberts, 50, was known as a whiz-kid in the bond business when he

worked for Morgan Stanley and Lazard Freres in the early 1980s. Both

his parents were physicians on Long Island; he majored in economics

at Colgate and in finance at Stanford Business School.

His firm patented a computerized version of his college-inflation-indexing

concept. The primary investments of these CDs were high-grade adjustable-rate

mortgage-backed securities.

The firm later sued the state of Florida for copying its idea in what

the New York Times called a rare instance of a patent dispute raising

constitutional issues. Florida’s response was that states are constitutionally

immune from intellectual-property laws under the doctrine of sovereign

immunity. In 1999, the Supreme Court agreed, and its decision outraged

the business community.

Business Week wrote that ". . . Justice John Paul Stevens likened

the court’s new ideology on state sovereignty to a `mindless dragon’

chewing holes in existing law. That dragon just took a big bite out

of the property rights of Corporate America."

College Savings Bank, 5 Vaughn Drive, Princeton

Metro Center, Wing B, Suite 100, Princeton 08540-6313. Peter A. Roberts,

president. 609-987-3700; fax, 609-987-3760. Home page: www.collegesavings.com

Top Of Page
Self-Teaching Call Center Software

Knowledge management is among the top five priorities

for most Fortune 1000 CEOs, says Kent Heyman, CEO of ServiceWare Technologies

on Emmons Drive. "If you took a poll, you would find they believe

harnessing, preserving, and leveraging their intellectual capital

is an enormous challenge," he says. His company offers a solution

— a way to efficiently access data so that intellectual capital

does not reside in separate silos.

ServiceWare, which trades on Nasdaq as SVCW, has 12 full-time employees

on Emmons Drive and 60 elsewhere, but it is planning to move the headquarters

from Princeton to somewhere in Edison. "We love the Princeton

area but Edison is closer for people flying in and out," says

Heyman.

ServiceWare has contracts with 30 software developers from Epam, also

based on Emmons Drive and expanding (see story below). "They will

raise their rates when I say this, but they have an awesome quality

— they are very, very good," Heyman says.

Andy Gilbert of Hale & Dorr on College Road East is ServiceWare’s

counsel, and Mark Rosenberg of Cushman Wakefield represents ServiceWare

in its move to Edison.

For both telephone and web-based help desks, ServiceWare’s product,

MindSynch, enables customers to access knowledge and information while

serving themselves via the web. With MindSynch, a call center representative

can more efficiently deliver information while talking to a customer

on the phone.

"Our product is vertical, not industry specific. Any business

with complex problem solving needs — telecommunications, pharmaceutical,

or financial services — can benefit from the leverage our product

can give them," says Heyman. Current clients include H&R Block,

Amgen, a utility company, a call center outsourcing company, and QUALCOMM.

In contrast to a search engine like Google, which merely grabs data,

MindSynch turns the data into useful information by doing an intelligent

search through patented technology to suggest relationships that it

has learned over time might be relevant. If a customer says his car

won’t start, the client might say that, "Your car is a VW, so

we know that the battery is often an issue."

"Our product is seeded with the basic knowledge people use every

day." For instance, if someone calls in with a computer problem,

representatives are able to access the database in a way that gives

the least experienced representative the same knowledge as the most

experienced. Heyman labels MindSynch as "self learning and intuitive"

as opposed to the older term, "artificially intelligent."

ServiceWare’s competitors include Seattle-based Primus Technologies.

Kana Communications, a Bay Area company that has an 11-person office

on Franklin Corner Road, E-Gain (another Bay area company) and Peregrine,

based in southern California.

Serviceware was founded by Jeff Pepper 11 years ago to supply content

to help desks and customer service centers. Pepper raised some private

money and merged his company with the Parsippany-based Molloy Group,

to form the current ServiceWare, which went public two years ago.

"It struggled," says Heyman. "ServiceWare lost $30 million

last year and consumed an enormous amount of cash, and in many ways

failed to meet investors’ expectations. This story has been repeated

over and over in the IT space, but we have been able to stay under

the radar screen, rebuild the product, and retool the sales force."

Pepper left the company and an investment banker, Thomas Unterberg

of CE Unterberg Tobin, took over as chairman of the board. Unterberg

found Heyman to be the CEO. "Unterberg saw the same opportunity

that I saw, a company with excellent customers and a very good product

that was suffering a little bit in the macro economic environment,"

says Heyman. "We have managed to improve the financial and operating

performance of the company in this difficult environment, which is

a real testimony to the people at ServiceWare."

Heyman grew up in Stockton, California, where his father worked for

the Santa Fe railroad. He went to California State at Fresno, Class

of 1977, and the University of the Pacific School of Law. He did business

litigation, most recently for Dowling Magarian Aaron and Heyman, and

he successfully created a precedent in a Federal Communications Commission

case, MGC vs. AT&T, which resulted in a start-up telecom collecting

$10 million from AT&T.

He left law, and with some friends started a telecommunications company

in Las Vegas. Four years later it had 2,500 employees and a revenue

run rate of $200 million. In 1999 to take advantage of the capital

markets, the firm, now known as Mpower, hired a new CEO who had been

president of Frontier Telecom, and he moved the headquarters to Rochester.

"I left in December, 2000, and took a year off to decide what

I wanted to do next and invest time in my young family." By that

time he had followed the company to upstate New York, where he and

his wife live with two sons and a daughter, ages eight, seven, and

two.

"I could see the downturn in telecom and decided I wanted to get

involved in a different space. My software experience? None. It is

rare to have a new and refreshing challenge, and I have had the opportunity

to do it twice, so I consider myself blessed."

"In asking some of the fundamental questions that someone with

experience doesn’t ask — you learn about new and efficient ways

of driving the business. Whether telecommunications or software, it’s

all the same: have a quality product, treat customers well to develop

loyalty, deliver the product through good people, and make money for

shareholders."

— Barbara Fox

Serviceware (SVCW), 29 Emmons Drive, Suite C-80,

Princeton 08540. Kent Heyman, CEO. 609-514-1429. Www.serviceware.com

Top Of Page
EPAM expands

For ServiceWare (see story above) EPAM helped design

and develop a new release of its sales force automation software,

eService Suite, and changed it to a browser-based Java platform. EPAM

was credited with reducing development costs by 60 to 70 percent.

Founded in Belarus, Russia, this computer consulting firm bills itself

as the largest provider of technology outsourcing and E-commerce solutions

in the former Soviet Union region. Originally named Effective Programming

America, it expanded last year from 3,000 square feet to 8,000 feet

in the same complex, Princeton Commerce Center. Bill Barish of Commercial

Property Network represented both owner and tenant.

Half of EPAM’s 45 employees in this country are from Russia, and it

has more than 300 workers in Moscow and Minsk. It offers software

development, E-commerce and content services to more than 50 clients,

ranging from Bally USA, Colgate-Palmolive, and Intellicorp, to the

Belarus office of the World Bank. Its focus is sales force automation

on PCs for various industries, domestic and foreign. The programs

are webcentric and adaptable for either Internet and intranet use.

Among its programs is a report viewer, which can interface with SAP

requirements.

Earlier this spring EPAM earned ISO 9001 certification and bought

a Russian company Exteria. For another client, West Group, a Thomson

company, EPAM launched a corporate website with the world’s largest

collection of online legal products (www.westgroup.com). In addition

to ServiceWare, EPAM has partnerships with Brio Software (business

intelligence solutions), Firepond (guided selling and online customer

assistance solutions), Interwoven (content infrastructure software),

SAP (collaborative E-business solutions), and SilverStream Software

Inc. (development of business applications).

The founder, Arkadiy Dobkin, studied electrical engineering at Minsk

Technical University and immigrated to the United States in 1991.

He worked for such firms as Prudential Insurance, Colgate Palmolive,

and SAP Labs. He has two daughters and a stepson. His wife, Elena

Annapolsky, has an internal medicine practice in Philadelphia.

The secret to offshore programming success, says Dobkin, is "just

hard work and good people, though getting temporary visas for a one-week

or two-week client meeting trip can cause problems." Still, he

says, "We have a good track record, and it’s getting better. Now

the embassies listen to us."

Epam Systems, 29 Emmons Drive, Suite C-10, Princeton

08540. 609-452-1701; fax, 609-452-1704. E-mail: info@epam.com Home

page: www.epam.com

Top Of Page
Expansions

Phytomedics, 65 Stults Road, Building 1, Dayton

08810. Bertold Fridlender, CEO. 609-655-0715; fax, 609-655-9291.

Phytogenics has moved from 2245 Route 130, where it was sharing with

Devaron to a laboratory in Dayton, but it also has lab workers at

Rutgers’ Cook College under Ilya Raskin. It does research plant sources

for new drugs and supplements, and also for synthesis of existing

drugs. In the past year it has signed agreements with Bristol-Myers

Squibb, DNAX Research (Schering-Plough’s California-based biotechnology

center), Degussa BioActives (part of the largest specialty chemical

company in the world), and Eisai Research Institute of Boston.

Association Associates Inc., 1 AAA Drive, Robbinsville

08691. Debbie Hart, president. 609-890-9207; fax, 609-581-8244.

The management services group moved from 2,000 square feet at 941

Whitehorse Avenue to 1 AAA Drive on July 31.

Top Of Page
Stock News

Derma Sciences Inc. (DSCI), 214 Carnegie Center,

Suite 100, Princeton 08540. Edward J. Quilty, CEO. 609-514-4744; fax,

609-514-0502. Home page: www.dermasciences.com

Two companies founded by Edward J. Quilty — Derma Sciences Inc

and Palatin Technologies — made major moves last week. Derma Sciences

signed an agreement to purchase the assets and business operations

of Toronto-based Dumex Medical Inc. for $3.76 million. The sale is

expected to close this month. Derma will operate Dumex as a wholly

owned subsidiary and retain the founder as CEO.

The privately-held Dumex makes wound care products and other medical

devices, including dressings and sponges used in the operating room.

Founded 20 years ago, it has 100 employees and has 40 percent of the

wound-care product market share in Canada. Of its sales of $9.1 million

last year, three-fourths of the sales were in Canada. It has a 55,000

square foot factory and a 22,000 square foot warehouse in Canada,

plus a factory in Nantong, China and a distribution facility in Atlanta.

"The combined product lines will give us the opportunity to compete

with our major competitors for hospital group purchasing wound and

skin care contracts," says Quilty.

Palatin Technologies Inc. (PTN), 4C Cedar Brook

Drive, Cedar Brook Corporate Center, Cranbury 08512. Carl Spana, CEO.

609-520-1911; fax, 609-452-0880. Www.palatin.com

Quilty took a company that had been called Rhomed and re-listed it

as Palatin five years ago. With Carl Spana as the current CEO, the

company has 28,000 square feet on Cedar Brook Drive.

Last week private investors paid $4.2 million for 2.6 million shares

of Palatin Technologies. With every five shares came a five-year warrant

to purchase one share of stock at a 25 percent premium to the per-share

purchase price.

Palatin will use the money to develop LeuTech, an infection imaging

agent that is pending FDA approval, and also PT-141, which can treat

both male and female sexual dysfunction.

Among the investors were Perceptive Life Sciences Fund and Albert

Fried and Company of New York and funds in Luxembourg and the Netherlands.

Top Of Page
Deaths

Margaret Elizabeth Weeks, 34, on July 28. She had worked

at Princeton eCom and New Age Systems of Princeton.

Claudia Tate, 55, on July 31. She was a professor of English

and African-American studies at Princeton University. A memorial service

is Friday, September 27, at 2 p.m. in the Princeton University Chapel.

James H. Tolin, 37, on August 4. He was a claims processor

at Alta Services on Quakerbridge Road and had worked at Borders Bookstore

at Nassau Park.


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