Most companies probably wouldn’t walk away from an investment that grew five times its size in under a decade.
But Northrop Grumman Corp. isn’t most companies.
Los Angeles-based Northrop Grumman, the world’s largest shipbuilder, and Saic Corp., a San Diego-based jet manufacturer, announced last week they will break up Amsec LLC, a $500-million joint venture that provides engineering and technical support services for the U.S. Navy.
The venture had grown tremendously since going public in 2000, when it reported revenue of $100 million. But for the Los Angeles defense contractor, which generated some $30 billion last year in revenue, the partnership apparently wasn’t worth the trouble.
Paul Nisbet, an analyst with Newport, R.I.-based JSA Research, said the joint venture may have made sense in the beginning. It allowed the companies to secure various contracts, but over time the two companies may have wanted to take it in different directions.
“Rather than having a joint ownership where each is compromising to the other’s desires, I think it’s just a matter of better control for both firms,” he said. “And rather than being part of Saic, then they can do what they want with it rather than what Saic wanted with it.”
Irwin Edenzon, vice president of technology development and fleet support for Northrop, echoed that analysis, characterizing the partnership as “very, very successful” but noting the two companies have different “strategic objectives.
“It was a very amicable process,” Edenzon said of the dissolution. “Both organizations have a very clear understanding of where they want to go in the future.”
Amsec is not dead in the water, though. Instead, the companies plan to split the venture along existing customer and product lines.
Northrop’s Newport News division will retain the Amsec name and continue handling the ship engineering, technical services and logistics, which pulls in about $200 million in annual revenue. Saic, which had held a majority stake in Amsec, will get the aviation side of the business.
“We now look forward to the increased ability to focus on our core business areas of command, control and communications,” said Deborah Alderson, president of Saic’s Defense Solutions Group, in a statement.
The breakup didn’t shake up either company’s stock price. In particular, Northrop closed up about 1 percent to $76.53 for the week ended June 13.
The breakup is expected to be completed by mid-July.
Laser Guide
Sylmar-based QPC Lasers Inc. announced this month that it has named Ronald Moeller vice president of manufacturing.
As the semiconductor laser maker moves to increase its manufacturing capabilities, the company hopes the addition of the 20-year manufacturing and engineering veteran will allow it to expand its product lines.
QPC specializes in building inexpensive, high-performance semiconductor laser diodes and related components. The company primarily serves the defense, industrial and medical markets. Semiconductor diodes are the most common way to generate laser beams and are commonly used in everything from fiber optic lines, to laser pointers to bar code readers.
Moeller previously oversaw manufacturing operations at Kotura Inc., a Monterey Park-based silicon photonics maker.
QPC is in the process of changing from a primarily research and development company to a manufacturer. The company’s 2006 revenue tripled to about $4 million and similar growth is projected this year.
U-Turn
It’s been a bit of a bumpy road for U.S. Auto Parts Network Inc. since going public in February, but the company finally seems to have gotten on track.
The Carson-based online aftermarket auto parts provider, which reported 2006 sales of $120 million, ranks No. 81 on the list of the 500 largest online retailers in this month’s issue of Internet Retailer magazine. The ranking is a huge jump from its position on last year’s list, when it was No. 166.
The news is heartening for a company that in March saw its stock price plummet from more than $12 to just $5.12 after revelations of management mistakes led some analysts to question the credibility of the company’s leadership.
“Being ranked among the top 100 online retailers is a great accomplishment and a reflection of our positive momentum and progress,” Mehran Nia, the company’s president and chief executive, said in a statement.
The company’s stock has been on the rise over the past three months, nearly reaching the $9 mark before closing at $8.64 for the week ended June 13. U.S. Auto Parts Network went public Feb. 9, selling 10 million shares at an initial offering of $10 each.
Staff reporter Richard Clough can be reached at (323) 549-5225, ext. 251, or at
[email protected]
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