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High-Tech—Cubic Corp. follows bad news with good



Leap Wireless Subscriptions Take Astounding Leap

Cubic Defense Systems, a subsidiary of San Diego-based Cubic Corp., has two new contracts and a third in the works. That good news followed on the heels of earlier not-so-good news that put Cubic’s stockholders in a funk.

During the first week of the year, Cubic announced a $9.82 million contract to supply air combat training technology to the Royal Netherlands Air Force, and a $5 million contract to supply 22 high-tech ground debriefing stations to the Royal Air Forces of the United Kingdom.

The company announced Jan. 8 it was in negotiations with prime contractor Ssangyong of Seoul, South Korea, to provide training equipment for that country’s military.

Cubic took an $18 million after-tax charge in its fourth quarter, ended Sept. 30, because of program changes on a U.S. military training program. That made for a fourth-quarter loss of $12.7 million and net profits of $674,000 for the 2000 fiscal year.

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Cubic announced the news after the stock market closed Dec. 22. Its closing price of $29.50 per share slid to $23 by Jan. 2. The stock has since rebounded, closing Jan. 9 at $27.31.

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Leap’s In Luck: Leap Wireless International, Inc. reported tripling the subscriber base for its cell phone service during the fourth quarter of 2000.

More than 190,000 customers were using its fixed-price, no-roaming wireless service at year’s end, up from 62,500 subscribers on Sept. 30, the company reported. By more than tripling its subscribers the company beat its goals and analyst forecasts, said company Chairman and CEO Harvey P. White.

The company is based in San Diego, yet Leap’s closest market is Tucson, Ariz.

The company ended the year offering service in 10 markets. December saw new markets pop up on a U.S. map like mushrooms on a wet lawn: Tucson; Charlotte, N.C.; Little Rock, Ark., and Salt Lake City. Leap added four other markets earlier in the quarter.

Leap’s goals are 1 million subscribers in 35 cities by the end of 2001. Designs On Expansion: Fourteen engineers formerly employed by Octera Corp. are the heart of the new San Diego design center opened by British Columbia-based PMC-Sierra, Inc.

The company, based in the Vancouver suburb of Burnaby, makes chips for optical networks, selling to customers like Alcatel, Cisco, Ericsson, Nokia, Nortel and Lucent.

Company officials said the San Diego location lets them tap a large pool of engineering talent.

In the past year, the company has increased its worldwide work force by more than 1,000 people and added seven offices and design centers, bringing its employment to 1,750 in 25 offices.

The company trades on the Nasdaq under the symbol PMCS.

Falcon Hovers At Discover: Discover Financial Services Inc., the people behind the Discover credit card, will use the Falcon brand fraud detection system from San Diego-based HNC Software Inc. Discover Financial Services is a business unit of Morgan Stanley Dean Witter & Co., and boasts more than 50 million card members.

Graves’ column appears weekly. Write him at bgraves@sdbj.com.

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