Title	Silver Lining
Date:	8/1/2003
Author:	FRANK NELSON
Source:	Santa Barbara New Press

Many high-tech stocks were spectacularly poor performers in 2002, a year in which companies continued to close, shed staff and scratch around like hungry hens looking for ever smaller crumbs of venture capital.

ExperTelligence, which moved to new digs on Chapala Street during the past year, was one of many players presiding over leaden stocks in 2002, its shares sinking from 24 cents to 6 cents.

But Bill Urschel, chief executive officer of the company which develops infrastructure and programming tools for the Internet, refuses to buy into all the gloom and doom. Indeed, he's bullish about the 2003 prospects for ExperTelligence and the high-tech sector generally.

Mr. Urschel says ExperTelligence is on the verge of a hiring boom, looking to add three engineers and two tech-support staff which will virtually double employee numbers. A funding deal is also coming down the pipe in the next couple of months to help support the expansion.

"Web technology as a whole has gone through a maturation process," said Mr. Urschel, his opinions forged through two decades in the Santa Barbara high-tech industry during which he has launched and run several successful companies.

"A lot of the silly stuff has gone. What we have left is a lot of very competent people working on solid projects. I think the industry will bloom this year."

He also believes there is enough venture capital around and sees no sign of projects dying through lack of funding. "People are doing amazing things with very little money."

Mr. Urschel anticipates a major resurgence in Web advertising in 2003 and said this will benefit several industry-related companies in Santa Barbara, including ExperTelligence subsidiary ExperClick, now known as Advertising Commerce Network, or ACN.

Dennis Cagan is chairman and chief executive officer of the Santa Barbara Technology Group (SBTG), a private investment and consulting firm that works with, and sometimes acquires equity in, early-stage technology companies.

He saw signs of improvement in 2002, a year in which SBTG injected money into three young companies — Unified Dispatch (computerized fleet dispatch based on voice recognition), InTouch Health (the use of robotics in health care) and InQ Inc., an instant messaging e-commerce application.

Mr. Cagan said the attitude of investors has undergone a major change. "In the late '90s everyone was looking for a home run and even a 20 percent return was seen as meager. Now people are more interested in solid investments."

For three years SBTG has hosted the Santa Barbara Tech Brew networking sessions which regularly attract hundreds of high-tech professionals. "There's nothing else like it in the country," Mr. Cagan said. "That response alone says interest (in the high-tech sector) is not dead."

In an effort to shelter from the economic fallout of 2002, a number of high-tech businesses sought safety in the arms of each other.

Just how effective and long-lasting these mergers prove — such as the coupling of Goleta companies Occam Networks (with Accelerated Networks), Somera Communications (with Compass Telecom) and Superconductor Technologies (with Conductus Inc) — remains to be seen.

Despite Occam's mid-year merger and executive reshuffle, the company has had a lackluster year with investors, its shares tumbling from 40 cents to 7 cents.

Occam, which employs 120 staff and develops broadband loop carriers to enhance high-speed data and video services, will announce its latest quarterly results this week.

Russ Sharer, vice president of marketing and business development, said these fourth-quarter returns are expected to be better than the third quarter and he's optimistic they will usher in a promising year for Occam.

Somera Communications, a global trader in telecommunications equipment, continued to shed some of its 360 staff during the year and watched its stock shrivel from $7.79 to $2.70.

In the wake of its $20 million purchase of Atlanta, Ga., company Compass Telecom in October and ongoing restructuring, Chief Executive Officer Rick Darnaby warned of a possible net loss for the latest quarter "the extent of which may be aggravated by current telecom market conditions."

Superconductor Technologies, named in early 2002 as one of the 50 fastest-growing technology companies in the Los Angeles area, develops and manufactures high-tech filters which improve the performance of worldwide wireless voice and data networks.

Despite losing $20 million and watching its shares sink from $6.50 to 94 cents during 2002, the company remains upbeat.

"We are confident the merger (with Conductus) creates a company well-positioned to benefit from the industry's recovery, which we expect to occur in 2003 and 2004," said President and Chief Executive Officer Peter Thomas.

EarthShell's shares also took a beating last year, sliding from $2.07 to 58 cents, but at least the Santa Barbara company, which licenses a range of environmentally friendly and biodegradable plates, bowls, cups, sandwich containers and wraps, finished the year on a high note.

The early Christmas present came with Wal-Mart's decision to place the natural tableware in about 1,200 stores nationwide, a vote of confidence which cheered investors and gave stock a much-needed lift.

Santa Barbara-based NetLojix Communications provides network access and technical management including IT support and managed hosting, along with design, integration and management of e-business solutions.

But in 2002 its shares slumped from 15 cents to 2 cents and the company is in the process of deregistering and continuing its operations as a privately-held corporation, a move now awaiting stockholder approval.

Carpinteria-based software developer QAD Inc. had a mixed year. Some jobs went as part of a cost-cutting exercise triggered by $4 million third-quarter losses, but three months later the company turned that around to post a small profit.

Now 2003 has got off to a promising start with the Nasdaq-listed company landing contracts with four multinational companies in the Czech Republic.

Magnetic Moments is a Goleta-based, highly specialized engineering company that partners with start-ups and also acts as an incubator for fledgling high-techs.

"We'll be their engineering department," said Geoff Deane, vice president and technology officer. Sometimes Magnetic Moments acts as paid consultants; sometimes instead they'll take a slice of equity in the young company.

Mr. Deane sensed the high-tech sector was definitely starting to turn around and attract more money from investors. "In Santa Barbara we have a unique convergence of high tech and people of high wealth," he said.