Business, military sales lift high-tech firms

Big-spending technology buyers in corporate America and the Pentagon helped make it a solid year for many Massachusetts high-tech and telecommunications companies.

The biggest winners: Companies that enjoyed a spike in equipment orders at the same time they tightened controls on expenses, yielding richer profits.

Raytheon Co., the Waltham defense and aerospace firm, was Massachusetts' biggest-grossing tech company with sales last year of $21.9 billion. It jumped to 22d place on The Globe 100 performance ranking, up from 74th place last year. Raytheon posted an 8.1 percent gain in revenue and a 98.4 percent jump in profit margin on increased sales of products such as missile defense systems, classified intelligence systems, and business jets.

International sales were especially brisk, and the largest growth in percentage terms came in the homeland security market, said Gregory D. Smith, vice president of investor relations at Raytheon.

''Homeland security was up 27 percent last year in sales," Smith said. ''We're expecting that strategic business area to be up 35 to 40 percent this year. In the Department of Homeland Security, you're now seeing money move out and get put into products and services."

In the business sector, a similar wave of spending was replenishing the fortunes of high-tech and telecom vendors whose order-flow collapsed after the dot-com bubble burst five years ago.

''The tech sector in Massachusetts is very dependent on business capital spending," said Bill Cheney, chief economist at John Hancock Financial Services, part of Manulife Financial Corp. in Boston. ''And we're at that point in the business cycles where companies are upgrading their equipment."

EMC Corp., the Hopkinton data storage equipment provider, boosted its sales 17.4 percent to a record $9.6 billion last year, growing at twice the market rate. Howard D. Elias, executive vice president for global marketing and corporate development, cited ''the relentless growth of digital information" and the clamor for new storage hardware and software to help businesses and other organizations manage it.

Stricter government securities and accounting compliance regulations, requiring businesses to retain data for longer periods, have added to the demand, Elias said.

Tech and telecom companies rode the business spending wave in a wide range of markets last year. Profit margins leaped 751.2 percent at Analogic Corp. of Peabody, whose products range from bomb detectors to fetal heart monitors, 55.1 percent at Segue Software Inc. of Lexington, which makes testing and monitoring software, and 38 percent at Color Kinetics Inc. of Boston, a maker of light-emitting diodes, an energy-efficient alternative to light bulbs.

Not every high-tech company shared in the higher return on sales. Stiffer competition and lower demand for some key products narrowed profit margins for Avid Technology Inc., a Tewksbury maker of film editing systems, by 64 percent even as its revenue rose by 31.5 percent.

Nine-year-old Sonus Networks Inc. of Chelmsford cracked The Globe 100 for the first time as revenue climbed 14 percent. Sonus was a late 1990s pioneer in so-called voice-over-Internet-protocol telecom gear that moves phone calls in the same format as e-mail and Web pages. That helps phone companies and big corporate network operators slash costs and offer inexpensive innovations.

One of the most dramatic bubble-bursting victims on the Nasdaq stock market in 2000-01, Sonus now sees its technology finally achieving sales liftoff. ''VOIP has become a mainstream market," said Hassan M. Ahmed, Sonus chief executive. ''This started as a US phenomenon, but now it's expanding around the world."

Robert Weisman can be reached at weisman@globe.com.