Unprofitable Essex buys money-making SDL

Firm expects deal to add $4 million in revenue

March 04, 2003|By Stacey Hirsh | Stacey Hirsh,SUN STAFF

Essex Corp., the Columbia company that makes equipment for optical networks, said yesterday that it acquired an Annapolis Junction technology company.

Financial terms were not disclosed. Essex President and Chief Executive Officer Len Moodispaw said the deal was mostly stock and some cash.

Essex said it expects the acquisition of privately held Sensys Development Laboratories Inc., or SDL, will increase its revenue by $4 million this year. Essex's revenue for 2002 was about $4.5 million, and Moodispaw said in December that he expected 2003 revenue to be twice that.

"Without this acquisition we were going to double revenue at least," Moodispaw said. "With this acquisition, it will be at least triple that of '02."

Under the deal, SDL's 28 employees will remain at its office and lab in Annapolis Junction, bringing the total number of Essex employees to about 100, he said. SDL develops software and communications systems, especially for intelligence use.

"They complement us in that they do provide the resources that help me create this full-solutions company that I want to build," said Moodispaw, who was on SDL's board of directors for two years until early 2001. "Our revenues and our profits will go up as a result of all this."

Moodispaw said SDL is profitable. Essex has not been profitable for the past two years. But Moodispaw said he expects the company to make a profit this year, and increased revenue from SDL will help the company meet that goal.

SDL's primary customer is the Defense Department.

Rik Krauss, president of SDL, will stay with the company and run the SDL division while it is integrated with Essex.

"Frankly, Essex and SDL have complementary core technical capabilities and, in fact, the combination of the two contract bases will allow for us to mutually support each other and frankly to grow our technical people as they progress in sophistication and seniority," Krauss said.

Shares of Essex, which are traded over the counter, fell 13 cents to $13.13

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