11/01 11:23
Titan's Anthrax Technology Ruins Film, Electronics (Update2)
By Amy Hellickson
San Diego, California, Nov. 1 (Bloomberg) -- The Titan Corp. anthrax-zapping technology that the U.S. Postal Service will use to sanitize mail also ruins unprocessed and unused film and damages some electronics, the company said.
Titan's machines douse envelopes and packages sent down a conveyer-belt with electron beams and x-rays, sterilizing the bacteria. The process will make the mail safer to handle and help ease public worry as anthrax spores have been found in post offices around the U.S.
While the technology has been hailed by the Postal Service as a way to keep the mail safe, it's left companies like PhotoWorks Inc., a Seattle-based Internet and mail-order photo finisher, trying to figure out how to get its products to customers without being damaged. PhotoWorks depends on the mail to ship and receive the majority of its film and pictures.
``The Postal Service will have to establish a protocol to handle film and electronics some other way,'' said Titan spokesman Wil Williams. ``Our machines will expose film and damage electronic components.''
Film is small enough to be dropped in mail slots and sent through the postal system, making it more likely to be affected by the technology, Williams said. Electronics including DVD players, personal computers and digital cameras may also be damaged, he said. Credit cards and compact discs aren't affected by the radiation.
PhotoWorks has requested a meeting with Postmaster General Jack Potter to discuss the affects of Titan's technology on film, said spokesman Mickey Lass.
Electron Beams, X-Rays
The Postal Service will use the electron beams to sterilize regular mail and x-rays for larger packages, Williams said. Titan's technology has been used on medical equipment and to kill food-borne bacteria, such as E. coli.
Titan shares rose 26 cents to $26.39 in late morning trading. Titan's shares have risen 62 percent since the Sept. 11 attacks and are up 88 percent in the past year. Shares of SureBeam fell 83 cents to $12.62 and are up 26 percent since the company first sold shares to the public in March.
Letters laced with anthrax have been mailed to Senate Majority Leader Tom Daschle, NBC anchor Tom Brokaw, and the New York Post. Traces of the bacteria have been found at postal facilities in New Jersey, New York, Washington, D.C., Florida and Missouri. Spores have been found in Congressional offices, at the U.S. Supreme Court, and elsewhere in the nation's capital.
Four people, including two Washington postal workers, have died after contracting an inhaled form of the infection, and several more are infected with a more-treatable skin form of the disease.
Understanding the Technology
Eastman Kodak Co., the largest maker of film, is working with the Postal Service and trade associations to better understand Titan's technology and how it affects unexposed and unprocessed film, since film can be damaged by ionizing radiation, Kodak said in a statement posted on its Web site. The company has customers that depend on the mail to send and receive film.
Titan's technology ``effectively will destroy film,'' Kodak spokesman Paul Allen said. ``The situation at the post office is really unclear and we are looking into how (Kodak) will be affected.''
The Postal Service is considering other ways to send film and electronics by mail without causing damage while still sanitizing the contents, Postal Service spokeswoman Rita Peer said.
``The Postal Service is going to determine what kind of contents could be damaged and we'll set up procedures for how mail that contains that content can bypass (Titan's) equipment and still be made safe,'' Peer said.
Who's Liable
Amazon.com Inc., the No. 1 Internet merchant, didn't return calls seeking comment. The company sells products, including cameras and home electronics, through its Internet Web site.
Consumers that buy products from companies like Amazon.com or PhotoWorks are at risk of receiving damaged products by Titan's technology and not knowing which organization to hold responsible, an industry spokesman said.
``Who's liable for this? The Postal Service? Titan? The consumer has the right to know who pays if a product is damaged,'' said Brian Kelly, a spokesman for the Electronic Industries Alliance.
The Washington-based association represents 2,300 technology companies including Microsoft Corp., Intel Corp. and Boeing Co., he said.
The San Diego, California-based company is expected to earn 14 cents a share in the fourth quarter, the average estimate of five analysts surveyed by Thomson Financial/First Call.
Earnings
Titan's third-quarter profit from continuing operations, which don't include SureBeam, fell 47 percent to $3.48 million, or 6 cents a share, from $6.56 million, or 10 cents, a year ago as sales in its information-technology businesses dropped. Revenue rose 2 percent to $274.2 million from $268.4 million. Titan plans to spin off SureBeam soon.
The company's technology products also include satellite- communication systems and a majority stake in SureBeam, a food- irradiation unit.
Titan said Friday that the Postal Service will pay $40 million for eight systems that can be used to neutralize anthrax, with an option to buy 12 more. Titan holds an exclusive license to sell that technology, which is manufactured by its SureBeam unit.
The systems are sanitizing suspicious mail sent from Washington in its Lima, Ohio, plant, Williams said. Titan will begin delivering systems to Washington postal facilities next month.
The Postal service may be forced to find technology other than Titan's to eradicate anthrax, an analyst said. Classica Group Inc. and Ion Beam Applications SA are also developing anthrax- fighting technology.
``The post office is going to have to x-ray letters and boxes and find another method to sort out products that will be damaged, like film and electronics,'' said Merrill Lynch & Co. analyst Michael Gardiner, who downgraded Titan Tuesday to near-term ``neutral'' from near-term ``buy.'' He doesn't personally own shares in the company.
``What that method will be is the big question,'' he said. |
