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Region's Tech Industry Booming: Index Reflects Hike in Investment, Prices of Stock in First Quarter.

Posted on: Friday, 2 June 2006, 21:00 CDT

By Clint Swett, The Sacramento Bee, Calif.

Jun. 2--Strengthened stock prices and a surge in investment funding helped propel a gauge of the region's technology industry up more than 9 percent in the first quarter of 2006.

The Sacramento Area Regional Technology Alliance's (SARTA) Tech Index climbed to 176.38 in the quarter, from 161.61 in the fourth quarter of 2005.

The index reflects the market capital of eight public companies, and the combined revenue, employment and funding for 42 private companies in the Sacramento region. It began with a base of 100 in September 2003.

Oleg Kaganovich, SARTA's chief executive officer, said the upward numbers are evidence of the region's solid technology business climate.

"Things are going very well," he said.

One major factor contributing to the index's rise was an increase of market capitalization -- the value of outstanding stock -- of the eight publicly traded companies.

Among them, Digital Music Group Inc. went public in February, with a stock price that's hovered for much of the quarter at about $9 a share for its 8.6 million shares.

During the same period, nutritional products company NutraCea jumped from 78 cents to $1.19 a share as the company announced a series of expansions of its rice bran processing facilities.

VantageMed Corp., GenCorp Inc. and International DisplayWorks Inc. also showed significant market cap increases in the quarter.

Investor funding of companies on the index also grew substantially, climbing to $28.4 million from $4.3 million the previous quarter.

The biggest chunk of funding went to Hansen Information Technologies, Kaganovich said. A San Francisco equity fund purchased a majority share of the software company in February for more than $50 million in cash and assumption of debt.

Adding to the surge in new capital were smaller "angel" investors, who opened their wallets to shell out amounts ranging from $250,000 to $1.3 million, Kaganovich said.

He said the recent trend of angels cashing in their earlier investments may have "given them the courage to invest" in new companies. "They see a higher probability of getting their money back," Kaganovich said.

But offsetting that, he said, are other investors who still have funds tied up in previous investments, leaving less money to invest now.

Hiring among smaller companies also increased, with the 44 private companies on the index adding a total of 151 jobs in the quarter.

Kaganovich said the increase came as companies decided to add more employees rather than squeeze from existing workers. He said 22 of the private companies on the index hired full-time employees during the quarter, while nine laid off workers.

Among those hiring was Hansen, which added about 20 employees in the quarter to fuel internal growth, said Scott Wright, the company's chief financial officer.

Another was Visionary Integration Professionals, a Folsom-based technology consulting company that added 20 people in the first quarter. About five of those are in Folsom and the other 15 are in New York and Texas.

"The need for the services we offer is on the upswing," said Patty Nelson, VIP's vice president, of the hiring spree. "The efforts we have been making in investing in those services has been paying off."

Nelson said VIP received a substantial infusion of capital during the quarter that will finance internal growth and acquisitions.

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SARTA MEMBERS The membership of the SARTA Technology Index includes 50 public and private technology and life-science companies based in Butte, El Dorado, Nevada, Placer, Sacramento, Solano, Sutter, Yolo and Yuba counties.

Cities with one company in the SARTA Index for the first quarter of 2006 include: Auburn, Ceronix Inc.; Chico, Digital Path Inc.; West Sacramento, Lipomics Technologies Inc.; Cameron Park, MaxPreps; Grass Valley, Mobius Technologies Inc.; Gold River, Synergex International Corp.; and Nevada City, Telestream

Cities with two or more SARTA firms:

-- Davis: Agraquest Inc., Antibodies Inc., Novozymes Biotech Inc., Veterinary Information Network

-- El Dorado Hills: Atrua Technologies, NutraCea, R Systems Inc.

-- Folsom: AgreeYa Solutions, Akros Silicon Inc., EA Consulting Inc., Jadoo Power Systems, JiWire Inc., Meridian Systems Inc., Visionary Integration Professionals

-- Rancho Cordova: Comtek Computer Systems Inc., GenCorp Inc., Integres Global Logistics Inc., Medinitiatives, Motion Control Engineering Inc., ThermoGenesis Corp., VantageMed Corp., Volcano Corp., WebRaiser Technologies Inc.

-- Rocklin: Hands On Video Relay Services Inc., Mionix Corp. and Alliance Computer Technologies Inc.

-- Roseville: AbsoluteHire, Affinity Global Solutions, CustomerLink Systems Inc., International DisplayWorks Inc., Sierra Logic and SureWest Communications.

-- Sacramento: Administrative Systems Inc., CoreLogic Systems Inc., Delegata, Digital Music Group Inc., Hansen Information Technologies, Herakles Data, KeyEye Communications, RagingWire Enterprise Solutions, Squaretree Software Inc., Unify Corp., Universal ATM Network. Source: Sacramento Area Regional Technology Alliance

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Copyright (c) 2006, The Sacramento Bee, Calif.

Distributed by Knight Ridder/Tribune Business News.

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Source: The Sacramento Bee

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