Sarnoff Layoffs for Profit

New for DeVry: Four-Year Degrees

RCN Plus Lycos Equals


Corrections or additions?

These articles were published in U.S. 1 Newspaper on July 14,

1999. All rights reserved.

‘Net Bill Paying: Paytrust

Flint Lane and Ed McLaughlin think they have the

answer to everyone’s paperwork dilemma. Just have all your bills sent

to your virtual bookkeeper, who scans them onto your personal web

page. Pay them whenever you want, or instruct your bookkeeper to pay

them for you. You don’t touch the bills, write the checks, or lick

the stamps, but if you want to review your accounts, all your bills

are on your web page. The service, called Paytrust, costs $7.95 per

month and is available now. A demonstration is at

Both Lane (a 1988 Rensselaer graduate) and McLaughlin (Wharton, Class

of 1987) had worked at Logic Works. Last October, when Logic Works

was sold to Platinum Technologies, they started Secure Commerce Services.

In January they began testing the service, and June 29 they launched

it. Soon they will start billboard ads, radio ads, and direct mail.

The company now consists of 17 employees and has funding from AT&T

Ventures and Spectrum Equity. It will expand at Princeton Commerce

Center in September.

Banks are doing electronic banking, and other companies are offering

bill paying online, but McLaughlin and Lane claim that no other company

offers a service where the consumer can get all bills logged into

one private web page and never touch paper.

— Barbara Fox

Secure Commerce Services, 29 Emmons Drive. 609-720-1818;

fax, 609-720-1819. Http://

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Sarnoff Layoffs for Profit

Last week the Sarnoff Corporation sounded an alarm

that had long been silent — the layoff alert — and it cut

staff by nearly 10 percent. About 80 people — including a few

who were to retire anyway — will be leaving in mid August. These

cuts are supposed to boost the profit margin in Sarnoff’s core business:

contract research for other institutions and companies.

Contract research is certainly not the only card that Sarnoff plays.

It makes money from licensing new technologies and also from leveraging

other technologies to start, and get equity in, such venture companies

as Orchid Biocomputer, Delsys, and Sensar.

"This amounts to an attempt to make our core business stand on

its own," says spokesperson Tom Lento. "We took this as an

opportunity to set a new goal, to get a 10 percent return on revenues

in our core business by next March."

Such a high profit margin is unheard of at colleges and universities,

where most contract research takes place. "We are looking at a

whole industry in which the margins are actually quite low," says

Lento, pointing to the 2 to 3.5 percent margins typical of academic


"If we don’t have a strong core business, it will affect our ability

to do world class research," says Lento. "We decided we needed

to do not just better but a lot better. We didn’t want to be put in

this position again. Because of this shot across the bow, we decided

to take the action."

It was just 12 years ago that the Sarnoff Corporation heaved itself

out of a not-for-profit slough and turned down the for-profit road.

Facing the threat of being dismantled, Sarnoff took its legacy of

being a television pioneer and remade itself to be the for-profit

division of SRI International, a nonprofit research organization based

at Stanford University.

Virtually alone among its peers, it is a research organization that

survives without support from a parent company. Both NEC and Siemens,

which have laboratories in the Forrestal Center, are examples of supported

research. At academic institutions, research is buttressed by a superstructure

that absorbs such administrative costs as human resources and payroll,

and it also benefits from the "free labor" of graduate students.

These layoffs are not the first nor did they cut the deepest. Retooling

toward the self support goal, Sarnoff reduced its workforce from 1,250

to a low of 600, and it stabilized at 800 in 1997. Profitable since

1993, it set the goal of being a $1 billion company by 2005 (U.S.

1, April 7, 1997).

Because it is a privately held for-profit firm, Sarnoff does not release

complete financial statements, but it claimed to have revenues of

$130 million for 1998. Still, starting in November, it began to lose


About one-third of the cuts were from technical staff to emphasize

software development over hardware. James S. Crofton, the new chief

financial officer — Sarnoff’s first — participated in these

discussions with senior management and board members but did not instigate

the cuts, claims Lento.

Crofton directs financial and purchasing functions and is also responsible

for internal computer services. An alumnus of Michigan State with

an MBA from the University of Michigan, he has been chief financial

officer at EA Industries and spent more than 20 years at Unisys Corporation.

(Some background: Unisys had hardware as its strong suit. Partly because

its software was not at the same level, it lost market share in the

1980s and suffered drastic cuts.)

"He went through the fire at Unisys," says Lento. "He

was brought on because he could strengthen our financial condition."

Crofton was out of the office last week and could not be reached by

press time.

"Contract research in general is a cyclical business," says

Lento, "which is one of the reasons why we established the two

other business models (licensing its technology and claiming an equity

stake in spin-off companies). If there is a recession, contract research

goes down. We can track fairly closely what will happen 12 to 18 months

down the road. Lo and behold, the figures from 12 months ago did show

there would be problems in the future."

Perhaps contract research can be compared to the canaries in the coal

mines. When the oxygen supply dwindles, the canaries die first, signaling

the humans to leave the mine. If contract research is down, should

we worry about a recession? Lento thinks not: "It has more to

do with the nature of our business than the economy in general."

— Barbara Fox

Sarnoff Corporation, CN 5300, Princeton 08543-5300.

James E. Carnes, president & CEO. 609-734-2000; fax, 609-734-2040.

Home page:

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New for DeVry: Four-Year Degrees

It’s not as though it’s the match box school of trucking

offering bachelors degrees, but DeVry Institute has raised academic

eyebrows nonetheless. It belongs to a relatively small group of "proprietary

institutions" — colleges that operate for profit — infiltrating

the elite world of higher education, where nonprofit and public institutions

have reigned for so long. In January, however, DeVry became the first

capitalist college to offer a bachelors degree program in New Jersey.

It’s now one of four schools in the state granting bachelors degrees

in electronics engineering technology. With an aggressive job placement

program, and tuition costs at a third of other schools, DeVry might

just be a force to be reckoned with in higher education.

For 14 years, DeVry has been offering non-traditional New Jersey students

— returning students, mostly — a range of practical, object-oriented

associate degree programs in everything from accounting to telecommunications.

Until now, the state’s Commission on Higher Education, which must

approve any institution seeking to move to the next level of degree-granting

status, had turned down DeVry’s application for a license to grant

bachelor degrees in the same programs. This reflects New Jersey’s

unusually high standards, says Beth Hyre, a spokesperson for DeVry,

rather than the school’s credentials. "New Jersey has always been

conservative and has very strict rules concerning post-secondary education,"

she says. "That’s just been its historic position." In fact,

DeVry’s bachelor has already been embraced at 16 other locations outside

of this state.

Despite opposition from the Council of Presidents, an advisory committee

comprised of college and university representatives, the commission

finally approved DeVry’s application for bachelors-degree granting

status in electronics engineering technology. The New Jersey Institute

of Technology in Newark was the primary objector, claiming a duplication

of its own program, only 40 miles away. Stevens Institute of Technology

in Hoboken and Fairleigh Dickinson in Teaneck offer the same programs

as well.

"Having three or four programs in the whole state is a pretty

low number," says Hyre. "We don’t receive taxpayer support,

but that’s secondary to the fact that we feel students should have

a range of options and a number of excellent programs to choose from."

Angela Suchanic, director of academic affairs at the commission, says

that because DeVry serves mostly commuting and returning students,

it demonstrated a real need for the program.

Even more significant is that DeVry passed the commission’s extremely

rigid licensing standards. The school offers 120 credit semester hours,

half of which are in general education, and has the required number

of full-time faculty members with PhDs. The library holdings are also

large enough to support a bachelors program. "We’re conservative

about approving anyone," says Suchanic. "The rules are the

same, whether you’re proprietary or not."

Unlike many public and private colleges and universities, the DeVry

program runs year-round, allowing students to complete an associates

degree in a year and a half, and a bachelors in three years. Each

four-month trimester costs approximately $3,500, and substantial financial

aid is available. At roughly $32,000 (excluding housing, meals, and

books), a complete bachelors degree at DeVry costs slightly more than

the bill for one year at a private four-year college.

Hyre lists even more compelling reasons to study at DeVry. "The

kind of education we deliver is hands-on and career oriented,"

she says. "Almost all our courses are labs." Indeed, the electronics

engineering technology degree is a very business-oriented engineering

program that emphasizes product development, technical writing, sales

and marketing skills, in addition to math and science. "Engineers

are basically conceptual, in that they develop an idea, but the electronics

engineering technologists translates that design into something that

makes it work," she says.

A proactive career counseling office also places 90 to 95 percent

of DeVry students with area employers such as Siemens, Packard, Zenith,

UPS and Unisys within just six months. The skills that DeVry teaches

are in great demand, says Hyre. "Given the climate in New Jersey,

where so many businesses aren’t able to expand because they don’t

have the trained workers, it becomes vital that they have the option

to become educated for these jobs," she says. "We felt that

it was really incumbent upon the state to move forward."

— Melinda Sherwood

DeVry Institute, 630 Route 1 North, North Brunswick 08902.

Robert Bocchino, president. 732-435-4880; fax, 732-435-4856. Home


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RCN Plus Lycos Equals

RCN placed in front of such industry notables as MCI/WorldCom, Teligent,

NextLink, and Sprint last month when it was named one of the nation’s

100 most dynamic telecommunications companies by Forbes ASAP magazine.

Just to prove how prominent RCN is becoming, consider CEO David McCourt’s

latest move: an alliance with Lycos Inc. Code-named "Lycos Lighting,"

the deal will give RCN’s half a million subscribers access to a personal

portal start page called "My Lycos" with personalized news,

weather, shopping, and E-Mail.

RCN, it seems, had been preparing to strike Internet gold all along.

The company’s trademarked True Local Network, a broadband fiber optic

platform capable of offering a full suite of communications services

including voice, video and high-speed Internet, was built specifically

to provide infrastructure for Internet-related services yet to come.

According to the company’s annual report, all of RCN’s customers combined

use only 20 percent of the network’s potential.

RCN is unique among major players in the telecommunications industry

because it offers service to residential consumers only. It targets

the densely populated areas between Boston and Washington D.C. that

comprise 40 percent of the nation’s residential communications market

in only 6 percent of its geography. RCN will soon launch facilities-based

services in the San Francisco and San Jose area using $2.5 billion

raised in part from Chase Securities Inc. and a public equity offering

led by Smith Barney and Merrill Lynch.

Although RCN stock has remained relatively stabile, the NASDAQ showed

a ten percent climb in the week of the announced alliance. Lycos stock

(LCOS) also gained.

— Melinda Sherwood

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:

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Francis G. Rigelon, 42, on July 14. He was a supervisor

with the Hibbert Group.

John H. Frazee Jr., 39, on July 9. He had been an auto

broker and parts manager at Quakerbridge Porsche/Audi.

Corrections or additions?

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— the web site for U.S. 1 Newspaper in Princeton, New Jersey.

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