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VoIP Pushes Telecom Firm to Profitability

VoIP Pushes Telecom Firm to Profitability

Continuous Computing Among Firms Looking At Expansion Plans

BY MIKE ALLEN

Driven by the growth of a data transmission technology known as voice-over Internet protocol, telecom equipment manufacturers such as San Diego-based Continuous Computing are racking up rising revenues in recent years.

Last year, the 6-year-old firm that makes both hardware and software used by major telecom manufacturers like Cisco Systems, Alacatel, and Lucent Technologies was ranked 16th fastest-growing in a survey done by accounting firm Deloitte & Touche. Although CEO Ken Kalb would not reveal numbers for competitive reasons, the company’s employment increase provides ample evidence of the firm’s growth.

“We probably increased our employment by about a third since last year, and we are actively seeking to hire workers for openings right now,” Kalb said.

Continuous Computing now has some 165 employees, 120 of whom work locally. He said there are current openings for engineers, production workers, and in sales and marketing. It has offices in the United Kingdom, Spain, India, Japan, South Korea, and China. About 20 percent of its sales are derived from Asian customers, while the remainder comes from customers in North America and Europe.

The dual drivers for Continuous Computing’s rising sales has been a relentless move toward cutting costs and expanding the features of the technology that moves data across the Internet, Kalb said.

For example, Time Warner now offers its customers access to cable television, the Internet, and most recently, phone service using VoIP , voice-over Internet protocol. Part of the networking equipment used to move voice data for Time Warner systems is made by Continuous Computing.

In addition to VoIP, the company also makes equipment used in building 3G (third generation) wireless networks.

The capital flow into telecom that stopped abruptly in 2000 has apparently resumed again for many telecoms, said Martha Dennis, president of the San Diego Telecom Council.

“People are buying capital equipment again. It’s partly because they’re more sure their investment will pay off, and partly because you can’t use the old stuff forever,” she said.

Continuous Computing announced earlier this month it received $15 million in equity funding, its fifth round since its founding in 1998, led by China Development Industrial Bank of Taiwan. Additional partners in the round were Harbinger Venture Management and CDIB Ventures (a subsidiary of China Development Investment Bank), and included further investments by existing venture firms, Technology Crossover Ventures, Intel Capital, Palomar Ventures, and the Viterbi Group.

The latest funding round brings the total investment into the company to $45 million.

Kalb said he plans to take Continuous Computing public within 24 months.

Unlike many other firms taking this route to raise funds, Continuous is already making a profit, Kalb said.

“We were profitable after the first 18 months, and have been ever since,” he said.

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