Top Executives

Srinivasan Ramaswamy has one of the best problems a chief operating officer can have managing his company’s staggering growth. Since it was formed in 1993, Glendale-based Systech Solutions Inc., a provider of application and integration services for e-commerce, market research and data collection, has grown from a two-person team to 165 employees throughout the U.S. and India. Revenues have soared from $472,000 in 1995 to $11.8 million, making the company 79th on Inc. Magazine’s list of the 500 fastest growing, privately held companies last year. With a growth rate in excess of 2,000 percent, some might start flying by the seat of their pants. But Ramaswamy and Arum Gollapudi, the company’s other co-founder and CEO, took a far more methodical approach. Ramaswamy spoke about it with Business Journal senior reporter Shelly Garcia. “What we have done differently from (other companies) in our industry is the way we are structured. There’s not too much hierarchy, and decisions are made by teams. When we are growing like this, the decisions have to be made fast. (Groups are) autonomous in decision-making with assistance from Arun and I. “Systech has a few groups. The business development team, professional services, the advanced technology team. If a client gives us a problem (to solve), business development goes to advanced technology and says, ‘Is there a technology that can solve this?’ Advanced technology goes and finds out what the technologies are and trains professional services on what technology can be (applied). “One thing that actually helped us grow like this was we created a kind of boot camp for the organization in terms of internal training. “There are two different boot camps, one for the U.S. (and one for India). When companies hire new people it’s a very difficult transition process. There may be a few experts and the rest of the people are just carried along. Because of our good training program, we had successes even after new people joined. “I think everybody walks into an organization with certain expectations of how the organization should be. Managing that is the most difficult. Apart from that, I think every other challenge has been a cakewalk. “When I say managing expectations, we have done it by mentoring, by encouragement, by being critical about any process. We have post-mortems for almost everything, success or failure. Being at the top I have to be open to being criticized myself. That’s the only way, the two-way communication, and I think that has helped us a lot. We are not the only people who are steering the boat. I think when you hire people you have to manage expectations so they help in steering the boat.”

Summary Business: Maker of drugs & therapeutic products Headquarters: Thousand Oaks CEO: Kevin Sharer Market Cap: $70.4 billion Dividend Yield: N/A Total Liabilities: $1.09 billion P/E: 62.44 Long-Term Debt: $223 million Amgen Inc.’s stock has fluctuated in the past year, even as it prepares to unveil its latest blockbuster drugs and perhaps open a new era for the Thousand Oaks-based company. After reaching a low of $45.44 in April preceded by a 52-week high of $80.44 in February Amgen has held steady in the $65 to $70 range in the past month after announcing it expects federal approval of its anemia-fighting drug Aranesp sometime this summer. Amgen is not alone with its wild swings in stock price during the past year, said AG Edwards equities analyst Jonathan Lanfear. “The FDA (U.S. Food and Drug Administration) had a number of drug recalls last year and it really impacted the entire biotech industry. Investors got skittish and started dumping stocks,” Lanfear said. But while the company has been impacted by the same volatility affecting other biotech stocks, the promise of its new anemia-treating drug Aranesp could push Amgen into a position of relative stability. “Aranesp is going to be the biggest thing ever for Amgen,” said Michael King, an analyst for Robertson Stephens. Amgen’s stock dropped steadily through the early part of 2000, going from $72 in January to $52.25 in March. At the same time, the company’s net income dropped by $15 million in the quarter ending March 31, 2000 from its previous quarter. Net income in that quarter was $266.2 million on revenues of $814 million. Net income in the same quarter a year earlier was $247.2 million on revenues of $745 million. The company at the time attributed the decline to overbuying in late 1999 by its customers who feared supply problems due to the Y2K bug. But while sales later picked up, Amgen’s stock drifted up and down as news of tougher drug approval policies at FDA gained hold in the summer of 2000 alternated with reports that Aranesp and three other Amgen drugs could gain approval this year, Lanfear said. Lanfear said Wall Street worries that a pending patent infringement lawsuit by Transkaryotic Therapies Inc. and Aventis S.A. would go against Amgen drove the stock price from $78 on July 21 to $54 on Oct. 31, 2000. But when a federal judge ruled that Transkaryotic and Aventis instead had infringed on three of Amgen’s patents, the stock price shot up to $72 on Jan. 25 of this year. That case is under appeal. Amgen closed at $59.88 on April 26 when it reported $304.9 million in net income for the quarter on revenues of $901.6 million, compared to $266.2 million on revenues of $814.1 million a year earlier. Amgen closed Friday at $66.3 1 But the buzz over Aranesp and three other drugs coming for federal approval give Wall Street analysts reason to sing the praises of the 21-year-old company. While the FDA has yet to rule on the new drug, Amgen officials say it could bring billions in new revenue to the Thousand Oaks-based company. Amgen officials insist they are not fazed by news June 12 from the FDA that it has not approved the company’s anti-cancer drug Plenaxis. The FDA said the drug was “inadequate” as a cancer treatment. Officials say Plenaxis, along with Aranesp, will ultimately be approved and pave the way for a new era for the biotech firm. Amgen has two other drugs on the way to FDA approval later this year, Pegfilrastin, which lowers the risk of infection during cancer chemotherapy, and Anakinra, which treats rheumatoid arthritis. “These are products that we believe will be very successful for us,” said Jeff Richardson, a spokesman for the drug maker. Kevin Sharer, Amgen’s chairman and CEO, says the new drugs could generate $3.6 billion in revenue in its first year and between $8 billion and $9 billion within five years. Sharer said the company will see a “transformation” in the next two years as it launches its new drugs into the marketplace. By contrast, Amgen had launched just three new drugs in the past 20 years. That is not unusual, said Bill Tanner, an analyst with S.G. Cowen Securities Corp. Tanner said most biopharmaceutical companies take 10 to 15 years to develop drugs and, even then, they typically struggle to make them profitable. Epogen and Neupogen account for 90 percent of Amgen’s total sales and analysts say the introduction of four new drugs over the next two years will spur record sales, allowing it to provide drugs for cancer and dialysis patients, a market previously untapped by the company. Epogen accounts for nearly $4 billion in annual sales for Amgen.

With a new Three Stooges film in development and a number of merchandising deals in the past year, Moe, Larry and Curly are on their way back. “The Stooges have truly become a big business,” said Bob Benjamin, principal and legal counsel for Glendale-based C3 Entertainment Inc., the company that runs the Three Stooges merchandising and licensing deals. Although the closely held company won’t release financial details, John Boyd, a licensing and merchandising consultant in Los Angeles, estimates the company likely grosses in excess of $50 million per year. “It’s a great brand because people know the Stooges from when they were kids,” Boyd said. “They’re known all over the world, so you have a vast merchandising opportunity.” By comparison, Boyd estimated the estate of Marilyn Monroe, for instance, annually grosses anywhere from $10 million to $20 million. Humphrey Bogart’s grosses about $5 million. Officials at the Richman Agency in Beverly Hills, which handles licensing and merchandising for those estates, would not confirm those figures. C3 owns Comedy III Productions, which Moe Howard, Larry Fine and Curly Joe DeRita founded in 1959 to merchandise their products. “The Stooges were very smart. They founded a company to market their merchandise that they could control themselves,” Benjamin, DeRita’s stepson, said. “They started with T-shirts, posters and things like that. We’ve continued that but we’ve gone much further into books, movies, beer and even the Internet.” Today, of course, there’s a Web site with everything from film clips and photos to, naturally, an on-line store. “They get about a million hits a day,” said Rick Schotts, vice president of business development for Barlex Inc., which built the Web site. “It’s mind-boggling to think that there are that many Stooge fans.” The site sells the usual T-shirts and posters, but also some unusual things like a Three Stooges hammer that really works and puppets of Moe, Larry and Curly. “We had a couple of guys who wanted to have a Three Stooges beer. We thought it was a great idea, but after a year that company folded,” Benjamin said. “They were guys who had money and who wanted to have fun. They weren’t really dedicated to the business. “People got mad at us that we licensed Stooges beer, but I’m sure the Stooges would have loved that. Being PC (politically correct) isn’t what the Stooges are about. Perhaps the biggest move for the company so far is the one that has film producing brothers Peter and Bobby Farrelly making a Three Stooges movie tentatively scheduled for release in 2003. The Farrellys produced “There’s Something About Mary” and “Dumb and Dumber.” Last April, ABC aired a biographical television movie about the Stooges. C3 began its aggressive merchandising and licensing drive only after the end of a difficult court battle between the Stooges’ heirs. In 1995, Comedy III Productions won the rights to market Stooges merchandise. Fine’s daughters; DeRita’s widow, Jean; and Comedy III sued Moe’s daughter, Joan Maurer; her husband Norman; and Moe’s great-grandsons, claiming they were owed money from past merchandising deals involving the Stooges. The court eventually ordered Moe’s heirs to pay the plaintiffs $4.3 million, including $1.6 million to DeRita’s widow. Bela Lugosi Jr., son of the late film star, led the Fines’ and DeRitas’ legal team and has since gone on to represent the heirs of other late celebrities involved in licensing or merchandising disputes. “There are a handful of icons that everyone is after, including my dad,” Lugosi told the Associated Press last year. Today, Benjamin and his brother Earl, Jean DeRita, Christy Clark and Kris Cutler, granddaughters of Larry Fine, all sit on the company’s board of directors. The company closed its Knucklehead store in the Glendale Galleria earlier this year, Benjamin said, to concentrate on the scores of licensing requests that come in each year. Earlier this year, the company licensed a video game and has gone on to market the more than 100 Stooge shorts on videocassettes and DVDs. And C3 remains aggressive in the protection of its properties. On April 30, it won a lawsuit against artist Gary Saderup who was selling charcoal drawings of the Three Stooges. The suit was the latest in a number of successful lawsuits brought by C3 against firms or individuals.

When will it end? That’s question No. 1, Main Street or Wall Street. So try this answer: Stocks will bottom on Wednesday afternoon, Aug. 15, after a market panic induced by flat-tire blackouts (as opposed to the rolling kind) in California. Feel better? Probably not. No one knows the future. All we can do is check history and work some numbers. We can measure the sources of decline. I think there are three: – Descent from overvaluation to fair valuation; – Descent to lower projected earnings; – Descent from fair valuation to undervaluation. Now let’s take a closer look at each one. Economist Ed Yardini uses an equity valuation model developed by the Federal Reserve. The model says the “fair” value for stocks is equal to projected earnings for the coming year divided by the current yield on a 10-year Treasury. In January 2000, for instance, the model said that stocks were overvalued by 70 percent. Then and now you could check it out for yourself by visiting his Web site (www.yardeni.com) and putting figures into his model. (You can access the valuation model at www.yardeni.com/stocklab.asp#smcalc and download his paper on valuation from www.yardeni.com/public/sktvalu.pdf.) I went to the Web site and found this: Based on the analysts’ consensus estimate for S & P; 500 earnings in the next 12 months , expected to rise 2.9 percent to $58.63 and a 10-year Treasury yield of 4.93 percent, stocks were undervalued by a slender 0.8 percent. If interest rates decline by another 100 basis points , as many expect , stocks will be undervalued. For the broad market index, the decline from overvaluation was painful. But it’s over. Mr. Yardeni also documents how routinely the analyst community starts every year with optimistic projections of earnings. Then earnings projections are lowered through the year. We’re not talking about last year. He shows it for each of the last 20 years. Yardeni is too polite to say it, but the analyst community is no better than you or I about predicting the future , clueless. Corporate America overstates earnings even more than analysts overestimate them. According to one study, about 20 percent of reported earnings are likely to vanish within five years due to corporate write-offs. Add the cost of stock options to corporate earnings statements, and earnings will be reduced by another 20 percent. Plug those two things into the Yardeni model , an earnings decline of 36 percent (multiply 80 percent times 80 percent to avoid overstating the combined effect) and an interest rate decline to 4.0 percent , and stocks are overvalued by 36 percent. It’s not a pretty picture. Finally, there is the unspeakable. If stocks can have periods of overvaluation, they can also have periods of undervaluation. According to the Federal Reserve fair value model, stocks were 30 percent undervalued in 1979 and 1980. They were 10 percent undervalued in 1982, the start of the great bull market. More recently, they were undervalued in 1993, 1994 and 1995. They suffered a brief period of undervaluation in 1998. Stock prices may not stop falling just because they have achieved “fair value.” They could continue to decline until they are raging bargains. Put it all together: The red light is off, but the caution light is still on. Credit Card Use Question: We underestimated the cash we would need in purchasing our new home and the associated costs. We do not qualify for a home equity loan, but we are approaching the need for approximately $15,000 to go toward home improvements. I have narrowed the options to the following: – Sell mutual fund shares at depressed prices, although it would still generate capital gains in excess of 50 percent of the proceeds. – Borrow on a Platinum Visa at 9.75 percent. – Borrow from my 401(k) at 10.5 percent. (My 401(k) loan would come from my cash balance in the account, and it permits repayment in installments even if I lose my job.) Which source of money would be preferable? We plan to repay any loan in one year or less. We have no debt other than our mortgage, which consumes less than 15 percent of our monthly take-home pay. We are in the 28 percent tax bracket.,C.D., via e-mail Answer: Use your credit card. Here’s why. First, eliminate the 401(k) loan. You should borrow from a 401(k) plan only in “hardship” situations. This isn’t a hardship situation; it’s a convenience situation. Second, if you pay 20-percent tax on 50 percent of the mutual fund shares you redeem, it will cost you 10 percent of your money. Worse, it will take the entire amount out of the market, and it may never get back. The cost of borrowing on your credit card, however, could be much less than 9.75 percent of the amount borrowed because your intention is to pay off the loan in a year or less. Q: With returns sinking, what are the mutual fund managers doing to earn their income? A year or so ago, I watched the Kaufmann fund go into the basement (including my contribution) while those guys were paid millions for managing the fund during the same period. Last year, another well-known fund that I invest in lost almost 30 percent over the calendar year. My 401(k), which I could adjust only quarterly, ended with the same results. They stood by and watched both go down, down, down. Where were the “managers” during this time? My question: If someone is investing in mutual funds and his “managers” don’t make reasonable moves, what options does he have, excluding legal action, of course? Do we just go with the 50/50 stock index fund/bonds fund program you suggest and trust that all will be well when retirement occurs? , G.M., by e-maill A: Let’s start by recognizing that money managers are always between a rock and a hard place. If they decide that stocks are overpriced and move to cash, professional financial advisers will chide them because they aren’t picking stocks. Others will say that they don’t want to pay them for sitting on cash. Still others will say they don’t want to lose exposure to opportunity. The punishment can be terrible. How terrible? When Foster Freiss, manager of the Brandywine fund, felt the market was overpriced in 1997 and put nearly half his $8.4 billion fund in cash, investors rewarded him by taking their money out. By the end of 1998, the fund was down to $4.9 billion in assets. Much the same happened a few years earlier when Jeff Vinik, then portfolio manager for Fidelity Magellan fund, decided to move a hefty portion of the portfolio to bonds. Basically, fund managers are told to invest in an asset class and stay invested, regardless of price levels. If they wander, the professional advisers who help people manage their portfolios say the fund is suffering from “style drift” or is just not doing its job. Questions about personal finance and investments may be sent to Scott Burns, The Dallas Morning News, P.O. Box 655237, Dallas, TX 75265; or by fax: (214) 977-8776; or by e-mail: scott(at)scottburns.com. Check the Web site: www.scottburns.com.

J.D. Power III Title: Chairman Age: 70 Education: B.A., College of the Holy Cross and M.B.A., Wharton School of Finance Most Admired Person: Alvin Toffler Career Turning Point: Starting my own business Personal: Married, four grown children J.D. ‘Dave’ Power revolutionized the world of market research, and helped improve the quality of consumer products Companies large and small give lip service to the clich & #233;, “The customer is always right.” Some actually believe it; a few really act like it. But there was a time when it was even worse. Before the late 1960s, if you’re seeing that era through the eyes of J.D. “Dave” Power, almost nobody in the business world even thought about it. Certainly not anybody in the American automobile industry. “They knew it all and knew what customers wanted,” said Power. So, in 1968, Power left his market research job in Detroit and headed west. Settling in Southern California, Power went into business for himself. In an age when market research often meant telling clients what they wanted to hear, Power had a different idea: Do the research without being shackled to a single client, and then offer it for sale to anybody who thought it was worth buying. Then one day, about the time Mazda was having trouble with its rotary engine, a Wall Street Journal reporter got hold of one of those reports. Mazda’s troubles ended up on every front page in the U.S. and suddenly J.D. Power and Associates was a name to be reckoned with. “But it still took us 20 years to get any credibility in Detroit,” Power said last week. Now, from the company’s headquarters in Agoura Hills, Power manages a virtual empire devoted to the consumer: a staff of close to 500 people and a company that had nearly $100 million in revenue last year. J.D. Power and Associates, still best known as a leading independent authority in the automotive world, has branched out to do surveys of other industries: homebuilding, financial services, travel, electric utilities and telecommunications. While best known for its syndicated studies that evaluate customer service, the company also does proprietary studies, commissioned by companies looking for objective information about what their customers want. Question: How did J.D. Power and Associates get started? Answer: I was doing market research primarily for General Motors in Detroit in the 1960s. What I saw happening was that they really weren’t listening to research. We tried to give straightforward facts to management. I left Detroit (because they weren’t listening). Eventually, I decided to start my own business. One of my first clients was Toyota. The Japanese knew they didn’t have a product right for the American market and they didn’t have good information. But management was open to it. Meanwhile, the domestic car companies (thought they) knew it all and knew what customers wanted. But the Japanese were just reentering the market. They went back to the drawing board with a model more attuned to the American market, the Toyota Corolla. That left the Big Three, plus American Motors, in a vulnerable position. We worked closely with Toyota in the first three years. Q: One of the first times market research seemed to have a highly visible impact on an industry involved the Mazda O-ring problem in the mid-1970s. What was the role of J.D. Power and Associates in all that and how did it affect the company? A: In those days, market research companies could only work for one company in an industry. I saw an opportunity to do generic studies across the board. Most people in the market research business thought that was unethical and that it wouldn’t work. But we went into syndicated research. We would fund the report and then make it available to them. We started off at the kitchen table in our house in 1973. We surveyed 1,000 Mazda buyers and we had 500 responses. While my son napped, my wife Julie would tabulate the surveys. One night I came home and she said, ‘Mazda’s got an O-ring problem.’ I said, ‘What’s an O-ring?’ We didn’t know but we put it in the report. When we sent results out, Mazda Motors of America didn’t even buy the study. Then one morning Charles Camp, the bureau chief of the Wall Street Journal in Detroit, called to ask about the report, which I didn’t know he had. I told him I would send him a press release and he said all right, but the story was going to press. So, after talking to him, I sat down and wrote my first press release. In those days, I had to find an office in our building that had a telex machine. I gave the gal $5 to type up my handwritten release. The next day, on the front page of the Wall Street Journal was the article. Within 48 hours, we were in every newspaper in the world. We were challenged by Mazda, but we knew we had an accurate reading of what was going on. It gave us credibility with the press after that and I believe our reliability with the press is what has built our reputation. It isn’t that I had good insights. Q: How has the automotive industry changed during the years you’ve been surveying it? A: The biggest change is the consumer movement. In the late ’60s and ’70s, we had Ralph Nader. He was a voice in the wilderness, but he was more adversarial. Of course, a lot of his findings were not well-founded. We used consumer ratings to present (the same thing). By doing that, we knew it wouldn’t be wrong. Q: While it may have started with the automotive industry, J.D. Power and Associates has branched out to study others. Do you feel you’ve been able to have the same impact on other industries? A: Certain industries just don’t get it yet, like the computer industry. In the late ’80s and early ’90s, we studied customer satisfaction there. We found, where the automobile industry was product-driven, the personal computer industry was technology-driven. We tried to make it both. We gave up after four or five years because they weren’t interested in what we were doing. They were always looking for the next product, not what the consumer wanted. They spent money on product development instead of it being a balance by listening to consumers. The computer industry has a long way to go to satisfy the average consumer. Q: At about the same time, you tried to survey the health care industry and decided it might not be worth it to enter that arena. Just recently you have decided to give it another try. Why is that? A: In the health care industry, there are so many factions. They don’t have a common goal. There has been a lot of research done but they all have different findings and they often conflict. We tried several times to come in. Now, we’re doing studies in specific areas. We’re taking it one step at a time. We’re starting with how pharmaceuticals are being used by consumers. We’re not trying to answer everything up front. Q: What impact has technology had on the way consumers behave? A: The information explosion has aided consumers today like they’ve never been aided before. In the health care field, for instance, the doctor makes a diagnosis, then the patient goes on line and goes back to the doctor and says, what about this or that? Q: Do consumers have more impact on the economy now than they did 30 or 40 years ago? A: When (President John) Kennedy spoke to Congress in 1962 on a consumer bill of rights, I thought that was a landmark. Even today, other countries don’t do that. We have more open information with fewer hidden agendas, and this is changing the balance of power. CEOs now understand this and they want correct information. Consumers can topple a company overnight. Witness Firestone. Q: You have gotten into several other fields other than automobiles, most notably homebuilding. Given you don’t collect any revenue on syndicated surveys until you release them, how hard is it to justify what must be substantial start-up costs when you begin studying a new industry? A: That’s why you can’t do it overnight. You’ve got to invest in the right people. Our reentry into the health field, we wouldn’t have done it if we didn’t have the right people. It makes all the difference in the world. Q: Day in and day out, how can you assure the accuracy of all the different kinds of studies you do? A: Well, we don’t just ask questions. We will do a series of pilot studies to find out what’s going on. We might do it over a period of four or five years before we launch a study. Q: How do you control the use of your company brand in the advertising of other companies? A: In 1984, at the halftime of the Super Bowl, a new commercial came on saying that, according to J.D. Power and Associates, Subaru was second only to Mercedes-Benz in customer satisfaction. We didn’t know it was going to happen. Mercedes-Benz was upset. They called and asked how we could allow Subaru to advertise like that. I said we didn’t know it was going on. Eventually, all the carmakers were taking pieces out of the study to use in their commercials. We knew we had to do something about it or the information wouldn’t mean anything to anyone. So we started to give awards to leaders (as a way of controlling the flow of information). The reports they subscribe to now are really purchase-of-service agreements. Over the years, it’s grown more important for us to police it and keep it going.

New businesses in need of help with employee recruitment and training, as well as established companies searching for resources to upgrade the skills of their staff, now have a coalition of educators, administrators and business leaders to turn to for assistance. The Economic Alliance of the San Fernando Valley has just launched a Training Alliance program, which will serve as a one-stop resource center where business owners can tap the expertise of qualified teachers and administrators from the four Valley-based community colleges. Ken Phillips, director of education and work investment for the Alliance, said the organization will serve as the principal marketing agent for the four community colleges, and provide assistance in obtaining state funding to help pay for part of the training. The Alliance’s job is to also identify the right facility to provide the training based on the type of business and its location. The four colleges involved in the program are Los Angeles Pierce College, Glendale Community College, Los Angeles Mission College and Los Angeles Valley College. Valley College took on the first project under the new program last week. The college was selected by the Alliance to recruit applicants and provide customer service training for 200 staff positions at the new Target store opening in Van Nuys July 31. Lennie Ciufo, director of job training for Valley College, helped Target officials identify new recruits and set up a three-week customer service training program which, he said, would likely be needed for roughly 70 of the 200 new hires. Ciufo said the training won’t end with customer service. Employees will continue to receive additional training as they progress to ensure that they are qualified for advancement to other positions within the company. Costs for employee enrollment are the same as for anyone enrolling in the community college system: $11 per unit, with options for courses leading to credential programs. According to Phillips, businesses have, in the past, often been left to their own devices to find suitable training courses for their staff, which can eat up resources. “It used to be that a business that was looking, for example, to provide some additional training in something like workplace diversity used to call a college and they’d get sent the entire college course catalog,” said Phillips. “But that didn’t really give them much to go on. And, business (owners) have long thought of their local community colleges as a great place to send their own kids, but not necessarily their employees for training.” Phillips said, though there are programs at GCC, for example, that offer similar skill and recruitment training for local business, this will be the first time the four colleges have ever worked together to custom-design courses for individual employers. In some cases, more than one of the colleges could work together and, if a company doesn’t have enough employees to meet the minimum 20-student enrollment requirement, two or more companies could join together in a single program. “What is terrific about these new partnerships is that, with the exception of Glendale College, the presidents of each of the colleges are all new to their positions, as are we,” said Phillips. “Vocational training is certainly at the forefront of what we are hoping to accomplish here, but we also intend to keep on providing employees with post-employment training, because we are trying to find them jobs with futures,” said Ciufo. Ken Patton, dean of workforce and economic development at Glendale College, said, although his campus has long been involved in providing job training assistance for local businesses, this new program offers up an opportunity to expand on those services through the collaborative efforts of neighboring colleges and their staff. “We are the largest contract training college in the state, and we’ve been doing more than $5 million in training programs for more than a decade,” said Patton. “So we bring a ton of experience and expertise to the new program.” He said GCC is particularly strong in providing customized contract training for the manufacturing and computer design sectors, adding that the Training Alliance won’t work to replace GCC’s existing contracts, but rather provide a strong base from which each of the four colleges can work from in unison. “We will continue to keep up existing relationships with our clients, but when you put the four of our colleges together you have an opportunity to enter a new market,” said Patton. “What we are looking at is being of service to help with companies that we currently don’t do business with, saying, ‘Here we are together; we are bigger and better.'”

The average supercomputer starts at about $5 million and is typically found at only the wealthiest of universities and Fortune 500 corporations. But one Westlake Village company believes that it can supply computers powerful enough to do what these supercomputers do that are both affordable and easy to maintain. Supercomputers are generally used for projects that require complex mathematical computations, including the design of cars, aircraft and space vehicles. The recent mapping of the human genome would have been impossible without it, said Steve Conway, communications director for supercomputer maker Cray Inc. Using existing technology, Dolphin Interconnect LLC and server-builder RackSaver Inc. of San Diego have linked clusters of computer processors together, called it “Beowulf” and claimed it could be the next step in the evolution of supercomputers. Dolphin built the components critical in connecting all of the computer’s processors and developed the software to run the unit. RackSaver built the hardware and assembled the cluster components into the Beowulf using processors already assembled by Sunnyvale-based Advanced Micro Devices Inc. So far, the Dolphin/RackSaver partnership has sold two Beowulf clusters, both to universities. Dolphin officials believe there is even more of a market than that for their product. Dolphin was founded in 1992 as a developer of high-speed interconnecting equipment, along with computer hardware and software for computer clusters. Last year, it became a major supplier to computer manufacturer Sun Microsystems, boosting its sales and revenue figures. Dolphin posted $15.9 million in net income in 2000 on X in sales, compared to net loss of $91,000 on $10.3 million in sales in 1999, enabling the company to offer its first dividend ever to shareholders. While a unit costs between $200,000 and $1 million, depending on the size of the cluster, it remains well below the millions it costs to purchase a traditional supercomputer built by International Business Machines Corp. or Seattle-based independent supercomputer maker Cray Inc. Parts come off the shelf, as opposed to being built from scratch for traditional supercomputers, driving down the ultimate cost of the product. But the biggest reason to get the Beowulf is the convenience of having a supercomputer in the lab, rather than sharing an institution’s mainframe with other users, said Erik Asphaug, a principal investigator for the UC Santa Cruz’s earth sciences, astronomy and physics Department. Last month, the school purchased a Beowulf supercomputer to study asteroids and other bodies in deep space. Asphaugh said the computer will also help with research into the origin of the moon, the formation of impact craters and the fragmentation of asteroids due to impacts and explosions in space. UC Santa Cruz’ Beowulf, funded by the National Aeronautics and Space Administration, provides the university with a computing power nearly equal to most traditional supercomputers at a fraction of the cost, said Keith Murphy, Dolphin’s vice president of sales and marketing. As Murphy sees it, traditional supercomputers are on their way out, to be eventually replaced by cluster supercomputers like Beowulf and its next generation of similar units. He says faster processors and improved technology in so-called “off the shelf” parts will make them more convenient to use and maintain. “People can get parts off a shelf instead of going through a costly maintenance project every few years,” Murphy said. But Cray’s Steve Conway said clusters are still not the equal of traditional supercomputers. “When you talk about a cluster, you’re really talking about 500 separate computers that are linked together,” Conway said. “What you end up with is a computer where the very fastest part is the microprocessor, but its other parts the interconnection are quite a bit slower,” he said of the links connecting the computers to each other. Cray pioneered the technology in 1995 by linking several computer processors together. The theory worked, but the final product was much slower than the larger supercomputers it was already marketing, Conway said. “We found that cluster computers are good when you have a small problem, but when you have big problem with lots of different computations, it’s much, much slower than a traditional supercomputers and customers wanted speed,” Conway said. While IBM and NEC Corp. of Japan have marketed cluster computers, their focus remains on marketing the traditional supercomputer.

Airport Lease: The Los Angeles City Council has asked the Airport Commission to delay approval of a lease at Van Nuys Airport. The commission is scheduled to vote June 26, four days before Mayor Richard Riordan leaves office, to approve a lease of 5.8 acres of undeveloped land to be used for a new aviation business. Among those who have taken out bidding papers is Jerry Perenchio, a businessman who is close to Riordan. Unilab Returns to Market Investors bid up Tarzana-based Unilab’s stock price by 44 percent on its first day of trading June 6. The stock, which started the day priced at $16, closed at $23. Unilab, a provider of laboratory-testing services to physicians, managed-care groups and hospitals in California, sold 6.7 million shares in its initial public offering, raising $107.2 million. The money will be used to help the company pay down debt. The IPO returned the company to the public sector less than two years after it was taken private by an investment company. The company now trades under ticker symbol ULAB on Nasdaq. The offering was led by Salomon Smith Barney and Credit Suisse First Boston. For the first quarter, Unilab’s revenue rose 20 percent to $95.3 million from $79.3 million a year earlier. For 2000, Unilab had net income of $41.5 million on revenue of $337.5 million, compared with a net loss of $13.9 million on $285.1 million in revenue for the prior year. Bank Gets New Name The Bank of Granada Hills, one of the San Fernando Valley’s oldest banking institutions, has announced that its name is changing to First State Bank. President and CEO Richard Taylor said the bank is also purchasing First Coastal Bank’s Burbank branch, with assets of more than $18 million, increasing the Bank of Granada Hills’ total assets from $92 million to more than $110 million. The acquisition was valued at $1.2 million. Scott Rife will continue to serve as vice president and business development officer of the Burbank branch of the new First State Bank. The branch is at 333 N. Glen Oaks Blvd. The acquisition is subject to the approval of the regulatory authorities as well as the shareholders of both institutions. Founded in 1983, the Bank of Granada Hills is the oldest independent community bank based in the northern San Fernando Valley. K-Swiss Adds License K-Swiss Inc. has formed a joint venture with Rugged Shark, a designer and manufacturer of active-oriented footwear, to license, produce and market a collection of National Geographic outdoor-oriented and casual footwear. The joint venture will launch a full-scale line of outdoor and casual footwear in fall 2002. K-Swiss will own 75 percent of the new company. Rugged Shark, founded by footwear designer Jonathan Werman, will own 25 percent of the venture and provide its design and development expertise. Over the next 15 months, K-Swiss expects to incur expenses estimated at $1 million, or 10 cents per share, related to the full-scale launch of this product line in fall 2002. DIC Buys Golden Books DIC Entertainment Holdings of Burbank will purchase the assets of New York-based Golden Books Family Entertainment. The sale, valued at $170 million, will transfer Golden Books’ 500,000-title library, bringing well-known titles and characters like “Pat the Bunny,” Lassie and Underdog in its popular Little Golden Books series to DIC in the next two months. Golden Books declared bankruptcy in February 1999, which caused the Nasdaq to delist its stock, and is currently trading over the counter near 3 cents per share. Though its library remains strong, boasting both classic titles and contemporary favorites such as Pokemon and SpongeBob Square Pants, Golden Books has long found itself foundering in dire financial straits. In its most recent quarterly filing, in November 2000, it reported net losses of $5.8 million with revenues of $34 million. Litex Sues Delphi Litex Inc. has filed a patent infringement lawsuit against Delphi Automotive Systems. Sherman Oaks-based Litex has said Delphi caused substantial adverse impact on Litex’s efforts to license its technology to the automotive industry. It includes allegations that Delphi infringes at least one of Litex’s patents. Litex has been in discussions with Delphi for several years regarding the Litex NTP assisted catalysis technology. Litex holds seven U.S. patents which cover the treatment of exhaust gases from internal combustion engines including diesel and gasoline with NTP assisted catalysis. Three patents are assigned to the Lockheed Martin Corp. with exclusive, worldwide license, with right to sublicense held by Litex. The remaining four patents are assigned to Litex. Lockheed Martin is not a party to this lawsuit.

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