RESEARCH TRIANGLE PARK — What kind of year will 2006 turn out to be? With the stock markets relatively flat, will there be a good opportunity for companies to go public? What will changes at the top in management mean for some firms?
Let’s take a look at some promises and challenges entering the New Year.
The most promising regional company to go public appears to be venture-backed Motricity. The Durham-based firm closed on $30 million in venture capital last year and has been on a hiring and growth binge ever since. Motricity also has made a host of deals in the mobile content development and application space. Led by Chief Executive Officer Ryan Wuerch, Motricity enters the year under a full head of steam.
Waiting in the wings for the right market conditions is Voyager Pharmaceuticals. Voyager withdrew its IPO plans in December after having already cut the size of its offering.
Voyager’s lead product, Memcyte, targets Alzheimer’s disease, so the company, which was launched in 2001, has a potential hit drug to help drive investor interest. Voyager has raised $40 million from private investors.
Voyager originally planned to go public for $129 million. The offering later included nearly 6 million shares at $15-19 a share. That was reduced to $11-15 range and 4.5 million shares in December, a week before the offering was withdrawn.
Changes at the Top
Four high-profile companies begin the New Year either with new executives in control or searching for one.
William Amelio is the new chief executive officer at Lenovo. He has 1,800 former IBM-ers stationed in RTP where a new headquarters is to be built. Amelio takes over from Steve Ward, who led the transition of IBM’s personal computing division sale to Lenovo last year. Amelio has already committed himself to supporting the new headquarters. He also is a polished PC veteran, coming to Lenovo from Asian-Pacific operations for big PC rival Dell. And Amelio knows the IBM culture, having worn Big Blue in the past.
Nortel, meanwhile, is operating under its third chief executive since 2004 when financial problems led to the departure of then-CEO Frank Dunn. Dunn was replaced by Bill Owens.
Mike Zafirovski, a former Motorola executive, took over from Owens on Nov. 15. He immediately began putting his own management team in place. And Zafirovski didn’t prove to be shy on pulling the trigger on a major deal. Nortel recently moved to buy Tasman Networks, a California-based routing firm, for $99.5 million.
Sprint Nextel has yet to spin off its local telecommunications division as a separate entity, but when it does the Carolinas division will be a major player.
Dan Hesse, a former executive with AT&T Wireless, is the chief officer designate of the still-unnamed spin-off. Sprint’s operating title for it is “New Local Company”.
Hesse recently toured the Carolinas operation and talked with Local Tech Wire about the many challenges the new company will face. He’ll be back in North Carolina on Jan. 9-10 for a round of meetings with employees and community leaders.
Tekelec, meanwhile, continues to search for a new leader.
Fred Lax, the chief executive officer of the telecom gear manufacturer, declined to move to North Carolina when Tekelec relocated its headquarters from California.
The company recently named its chief financial officer, William Everett, as acting CEO. However, he is not a candidate to replace Lax on a permanent basis, according to Tekelec.
The change in leadership has not helped Tekelec stock (Nasdaq: TKLC), which closed 2005 down some 30 percent.
Red Hat To Stay Red Hot?
Speaking about stocks, what about Red Hat (Nasdaq: RHAT)?
The Linux software developer and services provider had a sensational year — and the markets responded, doubling Red Hat’s value to better than $27 by year’s end.
However, it will be interesting to see if CEO Matthew Szulik’s plans to sell some 27 percent of his 1.9 million shares affects perceptions about Red Hat.
Red Hat also begins the year without one of its founders, Bob Young, on the board of directors. Young stepped down in October. “In a funny way, my resignation is perhaps the finest compliment I can pay to everyone associated with Red Hat today. I have complete confidence in the future of the company,” Young said in a statement. Young helped launch Red Hat in 1993.
Another company to watch is Atlanta-based Cingular. On Jan. 1, its latest deal took effect, making Cingular gear and accessories available in thousands of Radio Shack stores across the country.
Cingular is also rolling out its own 3G, or third-generation, multi-media wireless network in an aggressive fashion this year. Cingular joins Verizon, Sprint Nextel and Alltel in the battle for the ever-growing mobile applications marketplace.
On the pharmaceutical side, PPD ended 2005 with a stock price in the $60s and another good year of revenue growth. But few people ever seem to talk much about PPD.
In its third-quarter earnings report, PPD reported a near-27 percent surge in net revenue to $215.8 million over the same period in 2004. Third quarter earnings per share rose to 66 cents, up from 44 the previous year
PPD (Nasdaq: PPDI) closed at $61.95 on Friday. Its 52-week high is $67.33, a huge surge from a 52-week low price of $39.89 in January. PPD, which was launched in 1985, operates offices in more than 28 countries and has some 7,400 employees.
On the emerging company side, keep an eye on Raindrop Geomagic, a 3-D software rendering firm, and its CEO Ping Fu. Fu wound up on the cover of Entrepreneur magazine as its entrepreneur of the year as she continues to expand Raindrop into a growing international firm.
Also, Arsenal Digital Solutions continues to win market share in the critically important data storage and management space.
Let 2006 begin. An interesting year it will be.
Rick Smith is editor of WRAL Local Tech Wire.