Beltway Money Man: Jonathan Silver

Venture capitalist Jonathan Silver doesn’t claim to be a political savant. Will Democrats gain the upper hand this November? “Whatever I tell you,” he says with a laugh, “go the other way.”

But Silver, managing director of Washington’s Core Capital Partners, isn’t so modest when it comes to making calls on the outlook for technology spending and Uncle Sam’s IT budgets.

Silver acknowledges the possibility of a slowdown for some government contracting but says spending levels won’t fall below where they were five years ago. “The federal government is going to spend considerable dollars on technology for a long, long time to come,” he says.

Full story at Forbes.com

Buying Opportunity In Government Tech

WASHINGTON, D.C. – SRA International, a tech services and consulting concern in Fairfax, Va., has twice graced our annual list of America’s Best Mid-Caps. But making that elite cut hasn’t protected the company’s stock price, down 21% over a one-year period.

The dip may be an investment opportunity.

What’s bothering SRA International’s stock? Among other factors, explains A.G. Edwards analyst Mark C. Jordan, the high cost of waging war in Iraq and Afghanistan has created uncertainty and delay, which is affecting spending on the information technology services that SRA provides: designing, managing and protecting networks for government agencies. The company does just under three-fifths of its business with national security customers, 32% with civilian government agencies and 9% in health care, along with a smattering of commercial work.

Full story at Forbes.com

In The Surveillance Sweet Spot

WASHINGTON, D.C. – Christopher Gettings, chief executive of Chantilly, Va.’s, VideoNext, has his full share of an entrepreneur’s most important asset: pluck.

“My confidence in what we’re doing is phenomenal,” says Gettings, 43.

VideoNext’s 28 employees develop software that displays the images and stores data drawn from video cameras (analog and digital), sensors and the like. The company’s product turns a PC into a command center, complete with virtual joystick, allowing the user to track multiple views from multiple security cameras on a Web-browser-type application. On the back end, the company asserts, the software can analyze the images and data to help the user to distinguish animals from people, track vehicle speed and measure crowd density, among other functions.

The software looks timely, given public and private sector fixation on security, as well as large-scale and data-rich government initiatives in physical access and radio frequency identification. Indeed, VideoNext’s customers hail mostly from big government agencies and the U.S. military. Gettings is mum on his top line, allowing only that the company broke even on sales somewhere between $1 million and $10 million.

Full story at Forbes.com

Software Lobbyists Think Global, Act Global

WASHINGTON, D.C. – Just prior to Congress’s August recess exit, the Business Software Alliance notched a few legislative victories. One was the Senate’s ratification of the Council of Europe Convention on Cybercrime. The other was the introduction of a patent reform bill similar to House legislation meeting with BSA approval.

But for BSA–a technology trade group representing the likes of Apple Computer, Microsoft and SAP–a truly noteworthy moment came a year ago last summer. Then, BSA chief Robert Holleyman had one of the more pleasant encounters that a Beltway lobbyist can hope for.

Full story at Forbes.com

Terrorist’s Loss, Consultant’s Gain

WASHINGTON D.C. – A new study from the National Association of Manufacturers describes the “substantial collateral benefits” realized by a handful of companies in their efforts to harden their supply chains against the threats of terrorism, natural disaster and energy shortages.

“This does seem to suggest that we ought not look at investments in global security on one hand as separate from investments in business performance,” said Jerry Jasinowski, president of the Manufacturing Institute, NAM’s research arm, at a press event on Tuesday at the association’s Washington headquarters. Flanking Jasinowski were executives from Dow Chemical, a participant in the study, and IBM, its sponsor.

That message will delight certain government officials. Since the Sept. 11, 2001, terrorist attacks, regulators at U.S. Customs and Border Protection and elsewhere have strained to convince the business community that security measures can coexist with, even enhance, the free flow of commerce. “This is really an outstanding piece of work,” said Michael C. Mullen, director of the Department of Homeland Security’s Office of Policy and Planning, of the study.

Another group that will cheer the survey: technology hardware and services outfits such as IBM, Motorola and Unisys. As the government has pushed its post-9/11 trade security initiatives–among them the Customs-Trade Partnership Against Terrorism and the Container Security Initiative–these companies have moved in to pick up related business.

Full story at Forbes.com

Weighing SafeNet’s Dangers

WASHINGTON, D.C. – A wary analyst community awaits SafeNet’s second-quarter financial results, set for release Wednesday evening. The last four earnings announcements from the Belcamp, Md., information security concern have fallen short of Wall Street expectations, and at a recent $15, the stock has lost three-fifths of its value since a high set in October.

Adding to the gloom: the overhang of an investigation by the Securities and Exchange Commission into SafeNet’s stock option grants. The company got a related subpoena last May.

With the slide in its stock price, SafeNet’s $364 million market value is now well below its book value, while its price-to-sales multiple is 1.4. The North American technology sector as a whole goes for 1.6 times revenues. Contrarian investors, particularly those interested in government contracting plays, may want to take a gamble on this beaten-up stock.

Full story at Forbes.com

Papers, Please

Washington, D.C., never wants for looming deadlines, and here’s a date that has Beltway bureaucrats and contractors scurrying: Oct. 27, 2006. That is when all federal agencies must be able to issue employees identification cards meeting technological standards demanded by President George W. Bush and developed by the National Institute of Standards and Technology.

“Everyone is working hard to meet this challenging deadline,” chirped a White House press release last week.

Whether everyone meets the deadline or not doesn’t matter much to Jay M. Meier, senior analyst at Minneapolis’ MJSK Equity Research. “If it’s Oct. 27 or March 27,” he says. “I don’t care.”

Meier covers a handful of technology outfits, several with an interest in credentialing: Fargo Electronics, Identix, LaserCard and Zebra Technologies. While his ratings vary among those stocks, he’s bullish on the identification business as a whole, deadlines or no. “The opportunity is so big,” he argues.

Full story at Forbes.com

Flir Systems: Seeing Beyond Government Sales

WASHINGTON, D.C. – It’s been a frustrating year for shareholders in Flir Systems, the maker of thermography and infrared imaging technology. The stock has lagged the S&P 500 by 22 percentage points and trades 35% below a 12-month high set last August.

The slow spell could be a good time to do some buying. “Flir has an interesting story to tell,” says Michael Davies, senior research analyst at Next Generation Equity Research and a bull on the company (his employer does no banking or other work for it).

Part of what makes that story interesting, as Forbes reported last October, is Flir’s products and customer roster. The Wilsonville, Ore., company sells gadgets like portable thermal imagers, which law enforcement or military personnel can use to track targets obscured by darkness, dust, haze or other obscurants. Flir’s cameras are the most widely used to monitor the U.S. border.

Full story at Forbes.com

Veterans Data Debacle: Biz Opportunity?

WASHINGTON, D.C. – What a mess. At the end of May, the U.S. Department of Veterans Affairs acknowledged that thieves had made off with a laptop containing Social Security numbers and other sensitive information for as many as 27 million veterans.

On Wednesday, five veterans groups filed a class action seeking, among other relief, $1,000 for each veteran able to demonstrate being harmed by the data loss.

But, as often happens in business, one man’s disaster is another’s opportunity. For Nicholas Magliato, chief executive of Trust Digital of McLean, Va., situations like the VA’s serve as a way to fire up his 50 employees.

Full story at Forbes.com

The Gatekeepers

WASHINGTON, D.C. – It’s not hard to see why FIFA, soccer’s governing body, chose Munich, Germany, to host the 2006 World Cup’s opening ceremonies and match. The city’s 69,000-seat soccer stadium, Allianz Arena, is a spectacle itself. Finished in April 2005 at a cost of €280 million, the orb-like structure’s façade radiates color thanks to three thousand foil panels that can each glow red, white or blue.

The stadium also showcases hooligan-addled FIFA’s efforts when it comes to safety and security. Take the automated access system, which can admit those 69,000 fans in an hour and a half, funnel supporters of opposing teams to separate sections, track occupancy of those sections in real time, block tickets in the event of theft or loss, and regulate turnstiles to ensure orderly exits.

For the designer of that access system, SkiData of Salzburg, Austria, the World Cup is no less of a showcase event. The company, which is owned by Geneva-listed Kudelski, a Swiss technology group, hopes the tournament’s exposure will entice more customers, notably North American ones, to upgrade to its ticketing gear.

Full story at Forbes.com