The Post: "A Tech Survivor Gets Stronger + Consumer Spending Up"
"A Tech Survivor Gets Stronger"
washtech.com
"Consumer Spending Up"
washingtonpost.com
"Report: Consumer Confidence Gains in July"
reuters.com
"3 Music Formats Challenge the Ubiquitous MP3"
washtech.com
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>>> A Tech Survivor Gets Stronger
Friday, July 13, 2001
By Neil Irwin,
Washington Post Staff Writer
In the past five years, hundreds of companies were founded to use technology to transform the way business is done. Many of them, of course, are now becoming intimately familiar with the nuances of U.S. bankruptcy code.
That leaves a lot of transforming to do and fewer companies to do it.
Integic Corp., based in Chantilly, is trying to pick up where many of its would-be competitors left off: helping companies and government agencies realize the promised benefits of technology — even as some of its glitzier former rivals struggle to stay afloat in a sea of wasted venture capital.
The 11-year-old firm is just the sort of stable, profitable employer that was key to the emergence of Washington as technology capital during the 1990s, and it is because of firms such as Integic that some experts argue the region's tech sector is weathering the economic carnage better than most.
Integic, founded in 1990 as Universal Systems Inc., employs about 600 people. The privately held firm plans to announce on Monday that for the three months ended June 30 it made a profit of $3.4 million on $34 million in revenue. That was an increase of 36 percent in profit and 48 percent in revenue compared with the previous quarter, when it earned $2.5 million on revenue of $23 million, company officials said.
The firm focuses in particular on developing and maintaining big software packages especially for government, health-care companies and the pharmaceutical industry. Robert E. LaRose, the company's chief executive, expects it to grow by an additional 400 employees over the next couple of years.
As venture-capital-fueled start-ups emerged in each of these fields as potential competition, LaRose recalls worrying not so much about losing business, but about the challenge of keeping good employees.
"They didn't seem to realize that it takes a while to build a company culture — the methods — and the model for what you're doing," he said. Moreover, sometimes these companies lacked experienced management — something that comes in handy, as corporate technology buyers are ever more concerned about the long-term stability of their suppliers.
"They want to know your team is stable and strong before they put you in a critical part of their business," LaRose said.
Among the best illustrations of how companies like Integic are doing the work dot-coms set out to do is a project the Chantilly company has undertaken for the Department of Defense.
Some visionaries have dreamed of a secure database, accessed through the Internet, in which all patient health-care information is stored. Doctors could enter information about their diagnoses, billing and related transactions could be managed, and there would be less risk of two doctors prescribing to the same patient drugs that could be dangerous if combined.
Healtheon, an Internet start-up now part of WebMD Corp., was one of several companies founded in the late 1990s with the goals of revolutionizing health care and saving billions of dollars by linking insurers, hospitals, and patients through the Internet.
WebMD lost $3.1 billion in 2000, and its stock trades for one-tenth of its price in early 2000. Meanwhile, Integic is building a computer system for the Defense Department that does for the massive military health-care system just what Healtheon and other upstarts envisioned doing for the nation's health-care system as a whole.
When complete, the system Integic is developing — now being tested by three hospitals — will track the care of 8.5 million members of the U.S. armed forces. It will allow a doctor overseas, for example, to use the Internet to quickly check the complete health records of a soldier stationed there and build on that record with details of tests and diagnoses.
Initially, the system will only keep records of outpatient interactions with service personnel and their family members — but just that is a big task, with 55 million encounters a year, according to Integic staff.
As with many of its projects, Integic is one of several firms executing the job. For example, International Business Machines Corp. will provide the technicians to deploy the system.
Where Integic believes it has bested dot-com challengers is in offering a broad set of abilities. Plenty of Web start-ups understood the Internet, said Larry Albert, Integic's senior vice president for health care. But many lacked the expertise to make it work with existing computer systems.
That's not to say the newcomers are entirely out of luck. Integic sometimes collaborates with newer firms, such as WebMethods Inc., the Fairfax seller of software used to make big computer systems talk to one another.
"The Internet is a powerful tool," Albert said. "The hard part is to determine where and how to use that."
© 2001 The Washington Post Company<<<
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>>> Consumer Spending Up
By John M. Berry
Washington Post Staff Writer
Friday, July 13, 2001; 12:52 PM
American consumers continued to increase their spending last month, particularly for new cars and light trucks, rounding out a quarter in which their purchases once again kept the U.S. economy from slipping to a recession.
The Commerce Department reported this morning that retail and food service sales rose only 0.2 percent last month, half the May increase. But a roaring gain of 1.4 percent in April meant that for the entire spring quarter sales increased at a 6.1 percent annual rate, the best reading in a year.
Meanwhile, other reports showed that consumer attitudes continue to improve slowly after a sharp decline earlier this year and that inflationary pressures are easing.
The University of Michigan said its preliminary consumer sentiment index for this month rose to 93.7 from last month's final reading of 92.6. The index reached a low of 88.4 in April.
"The early July gain was due to a more favorable prospects for both personal finances as well as the economy during the year ahead," analysts at the university said.
"The key point is that consumers' expectations about the future rose for the third straight month, even as their view of current conditions dipped," said Ian Shepherdson, chief U.S. economist at High Frequency Economics in Valhalla, N.Y.
"Expectations are the key to future spending, so we consider this report another brick in the rising wall of evidence suggesting the economy is turning up."
One factor making consumers more optimistic likely is the recent substantial slide in some energy prices.
The Labor Department said that its producer price index for finished goods fell 0.4 percent last month because the cost of energy items dropped 2.5 percent while prices for other goods increased only slightly. Gasoline prices decline 3.7 percent, residential natural gas prices were off 5.8 percent, electrical power prices dropped 1.5 percent and fuel oil prices dipped 0.2 percent.
Summing up today's reports and other recent statistics, economist James Glassman at JP Morgan Chase Securities in New York, said: "There's enough going on to make you maintain confidence that the economy is going to pick up in the second half of the year. The trend for consumers is quite remarkable considering all the layoff announcements and worries about the future."
With consumer spending for goods and services – most of the latter are not included in retail sales – probably up in the April-June period at a 2 percent to 2.5 percent annual rate after adjustment for inflation, more and more forecasters have become convinced the U.S. economy expanded this spring rather than contracting.
"It sounds odd, but the quarter's over and we aren't sure what happened," Glassman said. The biggest uncertainties, he said, are how much business cut back its spending for new plants, equipment and software, how much businesses reduced their stocks of unsold goods and what happened to the U.S. trade deficit.
Figures for all those become available much more slowly than for other economic reports on which estimates of the gross domestic product are based. The Commerce Department's advance estimate of second quarter GDP will be released July 27. The first quarter growth rate was 1.2 percent, slightly more than the 1 percent annual rate of the final three months of last year.
Analysts are certain business investment spending fell during the past three month, while movement in the trade deficit remains uncertain. But with consumer spending, which accounts for about two-thirds of GDP increasing at more than a 2 percent annual rate, it would take very large declines in the three sectors Glassman mentioned, to cause GDP to fall. Nevertheless, he cautioned that that could still happen.
Aside from those sectors, Glassman said, "all the things we know are positive."
© 2001 The Washington Post Company <<< |
