Rookies save time and money

By Peter Howe, Globe Staff

harpen your focus on the one thing you do well. Sell products that save people money quickly. Cut costs. Sell abroad when the local market stinks. And open a little local bank.

Those are some of the lessons for success that emerge from this year's crop of first-time members of The Globe 100.

The group of nine companies is by far the smallest class of "rookie" members in the 15 years The Boston Globe has been compiling The Globe 100 list — a reflection of just how hard the economy has made it recently for smaller companies to become money-making machines like Gillette Co., Staples, and State Street Corp. In recent years, there have usually been 20 or more rookies on the list.

Three of this year's nine newcomers are small regional banks that benefited from declining interest rates and demand for closer customer service in an age of megabank consolidation: Mayflower Co-operative Bank of Middleborough, Mystic Financial of Medford, and Falmouth Bancorp on Cape Cod. Mystic, the parent company of Medford Co-operative Bank, saw profit margins grow by 30 percent last year as it opened a branch in Bedford and boosted community lending.

A stronger emphasis on fundamental strengths played a key role for several companies that landed on The Globe 100 for the first time. GreenMan Technologies Inc. of Lynnfield, for example, was delisted from the Nasdaq small-cap exchange four years ago after sinking under $1 a share.

By last year, however, GreenMan had turned around finances sufficiently to rank number 62. GreenMan has been systematically divesting itself of a grab bag of recycling businesses, including units that make trash cans from recycled plastic, to focus almost exclusively on processing scrap tires for fuel and recreational-facility padding products.

Its revenues jumped 24.5 percent last year, and GreenMan completed four acquisitions of small tire recyclers around the United States. GreenMan now processes about one-tenth of the 300 million tires scrapped annually in the country. "We inherited a company that had some great visions of the recycling market, but they were stepping up to the plate with the expectation of hitting a home run every time rather than trying to hit a bunch of singles," said Charles Coppa, GreenMan's chief financial officer.

Likewise, "We have really focused on doing what we do well," said Stuart Clark, chief executive of Interactive Data Corp. of Bedford, whose nearly 1,200 percent improvement in profit margin during 2002 helped vault it to 21st place on this year's list. IDC's revenues rose about 10 percent, and reduced accounting charges for acquisitions helped boost profits.

The company provides highly specialized financial data, such as price estimates for over 3 million thinly traded securities, including 1 million municipal bond issues, that companies such as Fidelity and State Street use to calculate mutual fund net asset values.

In January, IDC paid $115 million for a Standard & Poor's unit that compiles stock-price information from 180 exchanges around the world and is expected to add $50 million or more to IDC revenues and help increase earnings per share by 15 percent or more as it also seeks to increase sales in Europe and Asia.

NMT Medical Inc. of Boston, whose stock traded for under $1 in 2001, produced a nearly 20 percent return on equity. After selling peripheral product lines, NMT invested heavily in marketing a so-called minimally invasive heart-wall sealing device for stroke patients and posted big sales gains in Europe.

Steady focus on cutting costs and heading off red ink drove two companies onto The Globe 100:

Arrhythmia Research Technology Inc. of Fitchburg, owner of Micron Products, which makes components for disposable echocardiograph sensors, tripled its net income during 2002.

And Varian Semiconductor Equipment Associates Inc. of Gloucester, which makes computer-chip manufacturing equipment, was plagued by slumping revenues and profits during 2002, but managed to stay in the black, enabling it to achieve a crucial Globe 100 criterion: making money during 2001 and 2002.

Henry Ancona, president of Cambridge-based Pegasystems Inc., whose profits rose 19 percent last year, said, "In tough times, people only spend money when they can get a massive return on investment quickly."

Pega sells so-called business rules engines software systems, which customers such as Citibank's credit-card unit and the Federal Reserve Bank can use to automate most of the process of handling an erroneous charge or misprocessed check.

With some big-name customers on board, Pega is also increasing higher-margin sales of licenses for the software through partners like Accenture and IBM Global Services, which handle installing the systems and training the users.

Peter J. Howe can be reached at howe@globe.com.

Search the Globe  Search for:   Today Yesterday Past month Past year   Advanced Search © Copyright 2003 New York Times Company | Advertise | Contact us | Privacy policy |