Transmitting signals of a changing strategy

Paratek's new CEO aims to retool business plan to compete in tech market

Small Business

Howard Business

April 21, 2003|By TaNoah Morgan | TaNoah Morgan,SUN STAFF

Three years ago, Paratek Microwave Inc. was a darling among Howard County companies. The county's Economic Development Authority had honored it for helping Howard's economic growth.

Nearly 100 employees worked at the wireless network component-maker's headquarters and manufacturing facility in a 8,500-square-foot building off Snowden River Parkway.

One Motorola Ventures, an investment arm of the mobile phone manufacturer, was among its investors, and as recently as last year, Paratek closed a new round of funding, bringing its total to $53 million, to continue research and develop new technologies for the wireless market.

But with scandals and poor performance ripping the telecommunications market, venture capitalists retreating and little growth in the sector, the Columbia company has been forced to rethink its strategy and change management, said James V. DiLorenzo, the company's new president and chief executive.

Its retooling has involved a focus on government contracting and closing down its manufacturing facility, DiLorenzo said. The company that once promised 115 jobs in Columbia now has 50 employees spread between Columbia and an engineering plant in New Hampshire.

Paratek has developed ultraminiature components such as power amplifiers for mobile devices and antennas and filters that can tune in to any signal, and is hoping to start producing three of those products this year.

With a new CEO at the helm and its refocused business plan, the company recently set out to raise another $10 million to $15 million by the fall, DiLorenzo said, to help increase production.

Among its enticements, DiLorenzo said are its new management team, commercial and government customers that are expected to bring in $8 million in revenue for the company this year and new products in the pipeline. Last year, the company's revenue was $3.2 million, more than 90 percent of which came from government contracts. It won four new contracts this year.

DiLorenzo said that with products in production, the company expects revenue to double each year through 2005.

"I believe the company has a great opportunity to succeed," DiLorenzo said. "If some optimism can come to these financial markets, that might make my job a bit easier."

Despite the downturn in the telecom industry, the wireless and handheld devices segment is one bright spot seeing growth this year, said Philip Marshall, director of wireless and mobile technologies for the Boston-based Yankee Group. He said breaking in is the challenge for a small company in a market dominated by big players.

"The key here is, there's a relatively small number of large players they would need to go after," he said. "There's certainly demand for technological advancements in handsets and devices, but to an extent, those advances are determined by major vendors. ... It's a matter of how good is [the technology] and how effective they'll be in establishing these channels."

And while venture capitalists are scrutinizing companies more closely these days, they are still investing, said Jeanne Metzger, vice president of public affairs for the National Venture Capital Association, a trade group of venture capitalists and fund managers.

"What really matters today is the management team. Most venture capitalists are looking for companies being led by people who have built companies before, or have some sort of proven success record," Metzger said.

When they make an investment today ... they want to make sure they have tenacious people who have the right skills to deal with this market."

Paratek appears to be taking the right steps.

In the last year, the company not only brought on DiLorenzo, formerly president and CEO of the $100 million Nasdaq-traded Signal Technology Corp., but also hired Dr. James G. Oakes, formerly a vice president at Signal's wireless division, as senior vice president of wireless products; Dan Paulson, also a former Signal vice president, as vice president of commercial sales and marketing; and John Davidson, formerly financial officer for nearby Quantum Photonics, as vice president and chief financial officer.

"There are two bright spots in the market" in the telecommunications industry, DiLorenzo said. "We have a number [of products] that are at critical demand in the market."

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