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Connecticut's High-Tech Companies Going Strong

A new study has found 29 percent revenue growth for high-tech companies during 2001.

HARTFORD, Conn. -- A new survey of Connecticut's emerging high-tech companies found that 2001 revenues reflected a 29 percent increase over 2000 numbers, despite market conditions that severely restricted access to capital.

The study, co-sponsored by Connecticut Innovations, the state's high-technology investment arm, and PricewaterhouseCoopers, is based on individual interviews with 100 CEOs and other top management executives. The survey focused on companies whose sustainable competitive advantage is technology-based and who employ fewer than 500 people.

The $10.2 billion in projected 2001 revenues compares to $7.9 in 2000 revenues, according to the "Economic Climate Survey," released early this week. Forecasts for 2002 also are positive, with 61 percent of companies projecting revenue growth; 16 percent forecasting no change; and 15 percent facing a potential decline in revenues. The remaining eight percent are new and young companies that don't yet record revenues.

According to the survey, the state's high-tech sector employs an estimated 45,000 people -- a decrease from the 48,000 reported in the 2000 study -- but projects an increase to 50,000 employees by the end of 2002.

Despite the obstacles it faced, the state's high-technology sector maintained its reputation for innovation, the survey found: 81 percent have -- or will have -- introduced new products or services between January 2000 and December 2002. This is a higher level than the 78 percent that reported the introduction of new products and services in the two-year period from 1998 to 2000.

Perhaps most reflective of the current economic times is the fact that "financing" emerged as the single issue that entrepreneurs believe the state should focus on, overtaking "high taxes" -- last year's top priority. Responding to the question -- "What single issue should be the state's key focus to improve the climate for high technology in Connecticut?" -- 35 percent of the participating executives said "financing," compared to 20 percent in the previous study.

"This, probably more than any other response, tells the story of the difficulty our high-technology companies have faced over the past year in obtaining the capital necessary to sustain operations and meet their business-plan goals," said Victor Budnick, president and executive director of Connecticut Innovations.

"The survey validates the fact that, despite the decline in the stock markets and presumed demise of tech companies, there are more than 1,300 technology companies in Connecticut that largely expect to grow revenues in the coming year -- and who will require capital to expand their businesses," said Dave Jenkins, partner and leader of PricewaterhouseCoopers' New Haven-based technology practice. "Connecticut continues to be a birthplace of innovation and home to thousands of entrepreneurs."

More than 90 percent of the survey participants were the CEO, president, owner, chairman or general manager of the company -- the remainder consisted of other top management executives.

Of the 100 companies studied in the telephone interviews, 88 percent were privately held. They employ an average of 33 people, and average 2001 revenues were $7.5 million. Though the survey population represented the entire state, 35 percent of the companies are in Fairfield County, 20 percent are in Hartford County and 29 percent are in New Haven County.

PricewaterhouseCoopers