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Sunday, Apr 21, 2024

Winners & Losers

Fiscal 2013 was not a year to expect a profit from one of the region’s publicly traded technology businesses — unless you held shares in Qualcomm Inc.

With a few exceptions, technology players on the San Diego Business Journal’s list of Largest Public Companies seemed to generate losses last year.

In the case of Carlsbad-based ViaSat Inc., the loss was incurred while making a giant leap ahead in revenue. ViaSat (Nasdaq: VSAT) increased its revenues by 30 percent to $1.12 billion, but posted a loss of $41 million.

ViaSat — which makes satellite communication hardware and has the distinction of offering broadband service from its own satellite — was the only tech company to make a significant move on the list, which ranks public companies by revenue. The business rose from No. 14 to No. 9, passing Kratos Defense & Security Solutions Inc. and claiming the distinction of being the second-largest tech company listed. Kratos (Nasdaq: KTOS) experienced a moderate, 2 percent, decline in revenue.

The largest tech company, of course, is Qualcomm (Nasdaq: QCOM), which continued its rise as San Diego’s biggest public company during 2013 and still seems to be riding high. The business generated net income of $6.85 billion on revenue of $24.9 billion in 2013, with revenue up 30 percent from the previous year. As of April 15, stock in the chip maker and wireless technology behemoth was trading near the highest it’s been since a stock split in 2004 — despite jitters in the overall market.

High points of 2013 included the conclusion of Paul Jacobs’ run as CEO. Steve Mollenkopf, rumored earlier to be in line for top job at Microsoft Corp. (Nasdaq: MSFT), was named CEO in December and took over on March 4. The year saw Qualcomm introduce products such as top-of-the-line Snapdragon processors, and push wireless technology into new uses — including health care.

Moving Up as Others Move Out

ViaSat does business with military, government, commercial and domestic clients. The company introduced a way for aircraft passengers to efficiently access high-speed Internet service, signing JetBlue (Nasdaq: JBLU), United Airlines (NYSE: UAL) and El Al (TASE: ELAL) to the service. It also produces defense electronics. ViaSat said it plans to launch its second satellite around 2016.

Like ViaSat, Kratos makes satellite gear, but it has diverse other businesses. Kratos produces electronics of various types, integrates security systems for high-risk places and infrastructure, and produces drones — an area that CEO Eric DeMarco said will grow. The business has been reducing its staff. Kratos lost one out of every eight employees in 2013, going from 4,400 employees in December 2012 to 3,850 one year later. The corporation’s latest news release gave its head count as 3,800.

In general, technology companies uniformly moved up the list, though the moves weren’t necessarily their doing. Many companies moved up because several large companies fell off last year’s list. Life Technologies Corp., Leap Wireless International Inc., Cymer LLC and Active Network Inc. left the list because they were acquired. ServiceNow Inc. (NYSE: NOW) and Digirad Corp. (Nasdaq: DRAD) moved out of town.

Novatel Wireless Inc., No. 20 on the list, remained the fourth-largest technology company, with revenue of $335 million, down 3 percent from the previous year. Its net loss was $43.4 million —roughly half of the net loss it reported in 2012. The maker of wireless modems and related electronics may have a proxy fight on its hands, as an investor group is trying to put two of its representatives on the company’s board. Novatel (Nasdaq: NVTL) announced plans to restructure in September. CEO Peter Leparulo told shareholders in early March that management was “substantially streamlining our entire operations” and that head count was down 31 percent during fourth quarter 2013 from the previous year.

Where the Chips Fall

Entropic Communications Inc., No. 22 on the list, and Overland Storage Inc., No. 44, both saw their revenues drop 19 percent, tying for largest decline in revenue among technology companies.

Entropic (Nasdaq: ENTR), which makes chips for set-top boxes and related electronics, produced 2013 revenue of $259.4 million. The business attributed its $66.2 million net loss to less demand for “connectivity” electronics, or gear that is able to deliver entertainment throughout a connected home. Entropic acquired the set-top electronics business of Sunnyvale-based Trident Microsystems two years ago.

Overland Storage (Nasdaq: OVRL), which brings in the majority of its revenue by selling its data storage products, reported a 19 percent drop in 2013 net revenue, to $48 million. Overland had a net loss of $19.6 million for the year and has incurred losses since 2006, according to securities filings.

The year saw Overland’s accounting firm express doubt about the company’s ability to continue as a going concern. The statement appeared in Overland’s securities filing for the year ended June 30; the company repeated it in its most recent quarterly securities filing from February.

Overland executed a 5-for-1 reverse stock split April 9. In January, the business closed its $49 million all-stock purchase of a similar company, Luxembourg-based Tandberg Data Holdings.

In addition to Qualcomm and Entropic, Peregrine Semiconductor Corp. and MaxLinear Inc. make chips.

Peregrine (Nasdaq: PSMI), at No. 26 on the list, makes radio-frequency circuits for a variety of markets, including space, military and mobile devices. It reported a net loss of $4.1 million on revenue of $202.3 million. Revenue was almost flat, declining 1 percent. The business shipped its 2 billionth chip in 2013.

Carlsbad-based MaxLinear (NYSE: MXL), at No. 35 on the list, generated a $12.7 million net loss yet increased its revenue 22 percent to $119.6 million. The business makes chips for video devices, taking in cable and terrestrial television, as well as connected cars.

The two smallest technology players on the list bucked the trend by making profits.

RF Industries Ltd., which makes cable assemblies and connectors for electronics, reported net income of $3.8 million on revenue of $36.6 million. Revenue increased by 21 percent. RF (Nasdaq: RFIL) said it divested unprofitable businesses during 2013.

LRAD Corp. — which makes highly directional speakers that can send a person’s voice very long distances, or can be used as a sound weapon — reported net income of $1.3 million on revenue of $17 million. Revenue at LRAD (Nasdaq: LRAD) increased by 16 percent.


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