Dec 14, 2001

The shadow of Fran Rooney fell across Baltimore Technologies again yesterday, when it emerged that the internet security company's colourful former chief executive had taken legal action against it following comments made by his successor.

Mr Rooney issued a claim for damages against Baltimore in the High Court on November 23, based on comments made by Bijan Khezri, the new chief executive, in interviews after his appointment in October.

Mr Rooney has claimed the remarks were in breach of the "compromise agreement" he and Baltimore signed when he resigned in May, which stipulated that neither party could criticise the other. It is believed the case could turn on whether remarks made by Mr Khezri could be seen as directed at the group as a whole or at Mr Rooney personally.

Among comments complained of in the claim was the assertion that the salary Mr Rooney earned at the group was "outrageous". Mr Khezri told the Financial Times in October: "This company has been paying outrageous salaries. Fran Rooney was paid Pounds 450,000. No senior executive, including myself, should be paid more than Pounds 150,000."

Two weeks later Baltimore announced a round of pay cuts for directors designed to help trim costs at the cash-strapped group and demonstrate that executives shared the pain suffered by shareholders, who have seen the group's shares fall from a 52-week high of 462p to 15 1/2p last night. They reached Pounds 13.75 last year.

Among other aspects of the group's activity Mr Khezri criticised was its acquisition strategy, including the Pounds 692m purchase of Content Technologies, the e-mail security group, in September 2000.

Mr Khezri told the FT the deal did not "make any sense". Baltimore is seeking buyers for Content, which analysts believe may fetch between Pounds 40m and Pounds 50m.

Baltimore said it would defend Mr Rooney's action vigorously and believed it had a strong defence.

Mr Rooney presided over a rollercoaster ride for Baltimore in the markets.

At its peak the group was capitalised at Pounds 5.1bn as the technology boom catapulted it into the FTSE 100 Index in March 2000.

The good times did not last long, however, and in May, with Baltimore valued at just Pounds 128m, Mr Rooney fell on his sword after the second of three profits warning this year.

Baltimore is now struggling to break even before its cash runs out. At the end of the third quarter, it had Pounds 32.4m left and an estimated quarterly burn rate of between Pounds 9m and Pounds 12m.

Nader Vasseghi's whirlwind year started last summer, when he took a three-day trip to Yosemite National Park by himself to sketch out some ideas for a startup that would optimize data traffic in metropolitan networks. He drew up a detailed list of the values he wanted all of his future employees to share, and began making calls to get people on board.

The company he started on that trip, AuroraNetics, was acquired by Cisco Systems last week in a stock deal worth about $150 million, the first acquisition Cisco has made all year.

How did Vasseghi and his team go from an idea to a $150 million acquisition in less than 12 months? You can credit a lot to the company's product. AuroraNetics, based in San Jose, Calif., develops silicon chips for metropolitan fiber networks that ship Internet traffic at 10Gbps, invaluable technology for Cisco as the company vies to increase its stake in the burgeoning metropolitan area networks market. Vasseghi believes strategic staffing was also a key contributor to AuroraNetics' success. ''I put a lot of emphasis on the best talent,'' he says. ''Once you bring in the right people who are committed to excellence, the products and customer service will follow. After the first day of my stay, I started making the key phone calls to the people I wanted on my team.''

Just as important, the 42-year-old Vasseghi says, was the planning that went into the company after the initial team was established. ''A lot of startups just go at it ad hoc, and then toward the end come up with a bunch of problems,'' he says. ''From day one, I didn't want anyone to enter code unless we had a plan for methodology and infrastructure established. For the first two months of the company, we detailed every task, and broke it down into a period of a week or less. We had a 25-page schedule.'' The planning paid off: Cisco has been a customer since late last year, and plans to license AuroraNetics' technology to other vendors when the acquisition gets final approval, scheduled for August.

This latest achievement for Vasseghi, who grew up in Tehran, Iran, comes after a longtime devotion to science that started when he was a high school student. ''You should have seen my room,'' he says. ''One section of it was an engineering laboratory, and the other section of it was a chemistry laboratory. I was doing all kinds of experiments.'' In 1976, Vasseghi came to the U.S. and, having started school early and skipped a grade, enrolled at the University of California at Santa Barbara at the age of 16. He excelled at engineering and eventually went on to get a master's degree in engineering from the University of Southampton, England. But it was Vasseghi's part-time interest in psychology that eventually prepared him to lead a company. ''Over time, when I started working in the industry, I got more and more interested in management, and the psychology of organizational development,'' he says. ''Instead of reading novels, I read management books.''

AuroraNetics is Vasseghi's first startup, though he has more than 20 years of chip-design experience. His first job after college was at General Instruments in 1981, where he worked in optical electronics. After stints at microprocessor maker AMD - working on network controllers - and MIPS Technologies - working on high-performance microprocessors - Vasseghi spent eight years leading microprocessor projects at Silicon Graphics, (after it acquired MIPS), and eventually became VP of engineering at Sebring Networks, a switch-fabric solutions startup that was acquired by semiconductor company PLX Technology last year. Vasseghi left Sebring after that acquisition, and a few months later was approached by investors at the broadband incubator Raza Foundries, which offered him and chief architect Necdet Uzun $6.5 million to start a company that would focus on optical-equipment products designed to address the rapid growth of data traffic in metropolitan areas.

So what's Vasseghi's next project? First things first: ''For the next week or two, things are going to be pretty busy here.''

‘THE NEW ECONOMY’ VRS ‘THE OLD ECONOMY DISCUSSION’- BIBA'S 94TH MEETING - DR HOSSEIN YASSAIE, CEO, IMAGINATION TECHNOLOGIES GROUP PLC, BEST F.T TECHNOLOGY COMPANY OF THE YEAR, 1999

DESCRIPTION OF THE DISCUSSION -
MONDAY 26th MARCH, 2001, LONDON HILTON, PARK LANE

The key idea that I want to talk about is “The new economy” Vs. “The old economy” discussion. I’d also like to say a little about “Imagination” just in case there are a lot of people here who don’t know about the company I run. Primarily, I will give you the summary of the business at “Imagination”. I’m going to talk about what makes a sustainable, successful business from my viewpoint. This isn’t meant to be an academic study but mainly based on what I believe.

I will be looking at two business categories of which I certainly have a lot of experience in one, it being the company that I run about silicon design, micro chips and the main systems. I also will be discussing the way in which businesses have evolved, where they are heading, their value creation, how they have become successful and then I will address “The new economy” issues concerning the internet.

DESCRIPTION OF THE COMPANY

At “Imagination Technologies” we are a company of just under two hundred people. The focus of the business is licensing technology. For a small company to be successful, you either have to be big or operate very cleverly so we chose to do the latter given that we only started off as only forty people. What we do is create I.T and Technology; we then license them for other major companies. Certainly for doing this, one has to do a better job than they could hence you need very clever, capable people. The majority of the staff who work for the company consists of engineers (around hundred and thirty five people). We are a public company and as Babak Emamian mentioned, we are valued about three hundred million pounds. We also own very profitable head quarters in Kings Valley in offices in Germany.

Our business strategy evolves around generating technologies to do with human computer interface, graphics (what you see on screens), video, sound, images, speech, voice, etc… We base the strategy around developing a modernised system. I will also be discussing virtual reality conveyed in the graphs before you, also digital box, consumer audio, etc… One has to note the technology that goes into such devices rather than the equipment itself. Digital radio for example, is the new standard coming so say farewell to your old radios within the next two years. We will also be introducing speech-detected forms of technology so you can speak to the devices. For all of you who programme a VCR at 10pm to record channel five for example, it would be a much simpler option than typing all the numbers in and eventually getting it wrong!

The way that the company is organised is that it consists of four divisions: Focus, Graphics, speech and voice audio technology and the most recent one will be announced in the next few months. This is to do with a revolutionary way of communication. “Video Logic” is the actual name that we use for it and you can see them presented in well-established departments such as John Lewis.

I believe that the core of the business is licensing which is all about generating a new technology and obtaining approval. As you can see from the graphs, the business naturally evolves and is heading towards a three -way strategy. Half way through the process, the increase is inclined towards P.Cs, Dream Cast and Arcade systems. 70% of the existing arcade systems use the “Imagination” graphics in them. We are also designing central radios, surround sound systems and the plan for the future is mobile devices for MD3 players. So expect to see more of our technology in the next two years. The idea is that you can have very high performance graphics, to bring television quality graphics to mobile phone devices in the next couple of years.

VALUE CHAIN

I’d now like to concentrate on what I would consider important as a successful, sustainable business. I personally have certain rules that I apply to everything that I do and they may hopefully work for some of you too. First of all, you have to make sure that you are addressing a “need”. The entire point is that the problem must have an ultimate solution. You have to do something that the public will be willing to pay for. I am going to apply my rules to the new or old economy. Secondary, one has to consider that in every business there is an “existing Value Chain”. This involves those who came up with the idea, those who created it and even those who sold it. It doesn’t actually matter what it is, even from a small picture you can obtain what the process of conceiving a product is.

A money- making consumer product that is yet to be invented: “an automatic iron”. Imagine designing and producing an iron where you could simply throw in the clothes and they would be received from the other end completely done. I believe that such product would sell in millions. I also think that most of you here would also agree that this idea would succeed yet it is a concept that has not yet been solved.

To be a successful individual however, you have to be in the right section of the value chain. Going back to the idea of the “automatic Iron”, you would either want to be the designer or even the creator, certainly not the person who makes the cardboard boxes for the packaging. Clearly anyone could be capable of such menial task. Basically the point that I am trying to make is that to succeed, you have to be in the right part of the value chain. If it isn’t valuable, then don’t do it! You also have to make sure that you go about creating the product through the right channels. For example, there is no point in selling the automatic iron to naturists as they don’t wear clothes. You have to target the right audience. Moreover the preposition has to be appropriate. Finally what ever you do, the business has to be protected.

If you spend five minutes in an investment, someone else could shortly follow, where as if you spend five years, it will be very tough for the fellow competitors. I personally do not get involved in any businesses that need less than three years of research. Furthermore, if the business consumes a lot of money before even starting up, technically it has to be protected to prevent any financial losses. It’s great to have a company that produces fantastic products, yet if run by idiots, failure would be inevitable.

The other issue that needs to be addressed is that one has to operate within legal boundaries. The reason for that is that currently there is a lot of handling of illegal materials within the new economy especially the internet. If you steal a car for example, you can make a lot of money but it is a pointless process as it’s clearly an illegal act and the trading isn’t taking place within it’s correct value. It demeans the value. Business has to evolve with the changing industry.

I would now like to say a little about the microchips system. Take a television for example. It takes someone who has designed and someone who has created the chips. I want to discuss the value chain involving this and also the internet in terms of the modern economy today. (showing graphs) Here are three graphs demonstrating the business economy five years ago, today and the next five years. These may not apply to my business, however I believe that it is the theory that applies.

A number of years a go, you had companies such as Sony, Panasonic and others of that nature who could make equipments and buy chips from other companies, branded them and consequently sold them. At that time, chip companies were merely manufacturers of chips. Our industry nowadays looks slightly messy as the products are much more complex. There are a lot of electronics involved in such matters. Yet the integration level is so high that a minute chip integrates huge amounts of technology making things more simple. Due to such difficulties, there are companies like us who basically engineer and create intellectual and new ways of doing things. This could be seen as the art of “Imagination”. It is particularly interesting to observe the UK where although we are technologically advanced, there are many difficulties.

There are many companies who have had billions of pounds invested into them and yet do not manage to succeed. We on the other hand, depend on our brain- power. We come up with ingenious ideas that have taken up three years worth of research time that also highlights the protection that we offer. Brands are also very important to us as the flaw is changing rapidly.

In our business there are four things that are worth doing and paying attention to: Value chain, new ideas, speech, voice recognition… There are several companies who take these technological ideas from us and integrate them into a more successful business. Take the microchip system in a mobile phone for example, which is more complex than that of several chips in a computer.

All these new ways of technology are forthcoming. We firmly stress in creating ideas and selling them to people so that they can be integrated. To succeed, you have to take your time with the ideas even if it means a slow process over the period of three or four years. It is also significant to remember the influence of marketing so that you could appeal to a wide range of audience. Fundamentally any business needs to have such steps taken for success.

NEW ECONOMY

I would now like to discuss the progression of the new economy. For many years people were led to believe that the rules in the new economy were ought to be different. If you were an Internet company, none of the above rules applied, you merely required a good name. It almost seemed as though the impossible came possible. It seemed too good to be true that in some cases a mere catchy name was required. The main advantages of the internet were that accessing the costumer was fast and easy, as direct communication was made possible. This also applied to information access. It’s important to acknowledge that the intranet brought about many major changes to the business environment. It was responsible for creating new opportunities for companies that needed to sell infrastructure. There were millions of people going on- line and they needed connection. Companies such as Yahoo were in charge of this and also providing search sites for the public that have become extremely popular, and indeed the method of deliverance had changed rapidly. This was not a new economy but merely a different channel that caught a lot of people by surprise.

The question toying with our minds at the moment is who are the survivors and the winners? And who will be failing? My guess is that the infrastructure companies who connect people will succeed. Companies such as Yahoo and Amazon will also maintain their good reputations as an early brand was established. Old economy companies such as BT and Tescos using the internet to sell products will succeed as they are using it a as channel of communication.

My closing remark is that there is not an easy way of creating a valuable business. It takes a lot of effort, patience and hard work. It is also important to take into account the needs of the public, value chain, the barriers, the prepositions, etc…

There is no new economy, it’s just a new environment through a new channel!

Henry Azima graduated with first class honours in electronics and control engineering from University of Surrey in 1970. He went on to specialise in high technology naval electronics, weapons and missile systems. After a productive naval career, Henry joined Mission Electronics in 1980 as their technical director and became responsible for many innovative and internationally acclamied high fidelity products that helped establish Mission as a leading brand in audio. Henry's designs for Cyrus electronics and Mission loudspeakers have won over hundred international accolades.

More recently, Henry headed a research project that led to the creation of a new class of acoustic radiator. He holds over fifty patents in electroacoustics, majority of which relate to the NXT SurfaceSound technology. Henry Azima is the chief technology officer of NXT plc, a UK based technology and licensing company.

Financial Times April 9 2001

Imagination Technologies, the UK computer chip designer, and Digital One, the UK's commercial digital radio network, on Monday announced an alliance aimed at making digital radio receivers more widely affordable.

The companies are investing in the development and marketing of a low power, low cost digital base-band chip that can be used in portable digital radios, and integrated into handheld devices such as mobile phones and MP3 players.

Digital radios currently retail at between £200 and £300 in the UK, but Imagination and Digital One hope to bring that price down to under £150 ''within the year", and ultimately aim to make radios available at the ''critical sub-£100 price point", making it possible to incorporate them into in-car systems.

Hossein Yassaie, president and chief executive of Imagination, said digital technology had the capacity to substantially improve the quality and reception of radio, and also to add new elements, such as the broadcasting of data.

''However, the brutal truth is that digital radio cannot replace the old analogue radio systems until it becomes both cheaper and more portable," he said.


Hossein Yassaei

Financial Times; Mar 13, 2001

Third generation mobile phones do exist. Oh yes, they do. I met somebody yesterday who had heard of a colleague who had actually handled one. This sort of throw-away line is becoming a sick joke for most of Europe's mobile phone operators. In Britain and Germany alone, they have paid more than Pounds 50bn between them for licences to offer mobile internet, full motion video and other glitzy services - they hope from next year.

That's fine. But where are the handsets? Realistically the chances of working phones being ready in quantity next year are small. Many observers think it will be 2004, 2005 or even later before commercially attractive handsets are generally available.

Stockbroker Merrill Lynch, for example, concludes: "Our equipment team have just moved to the view that wCDMA (3G) equipment will not be available in volumes until 2004 against their previous view that equipment would arrive in bulk in 2003."

David Cleevely, chief executive of the telecoms consultancy Analysys points out: "Over the past 20 years of mobile telephony, handsets have always arrived late and in short supply."

This is being borne out by a number of suppliers such as Qualcomm of the US and Alcatel of France, who have already sounded warnings of possible late delivery of 3G equipment. There have even been signs that manufacturers are not confident they will be able to meet their original timetables for phones offering General Packet Radio Service, a technology halfway between today's regular services and the full 3G mobile internet.

Some mobile operators, however, remain sanguine. Vodafone, the world's largest, is committed to launching 3G services sometime in 2002 - it is coy about divulging exactly when. It is already creating a network of base stations in several towns and cities including Cambridge, which has ambitions to become Britain's 3G centre.

Vodafone is confident the handsets will be ready. Tim Harrabin, the executive who masterminded the company's 3G auction strategy through which it acquired its licence, said he refused to allow the company to take part in the bidding until he had a working 3G phone in his hands.

But the phone Harrabin used back in 1998 was Japanese, built to Japanese 3G standards. European standards differ from Japanese standards, and both are different from the US. This is the critical factor. Harrabin admits he has not yet seen a working phone from any manufacturer suitable for the European market.

The fragmented nature of the world mobile market explains why some people claim to have seen and used third-generation phones while others doubt their existence.

Japan plans to steal a march on the rest of the world by launching 3G services in May this year. There were, in fact, a number of prototype 3G handsets on the NTT DoCoMo stand at 3GSM, the mobile phone industry jamboree which closed last month in Cannes. Inquisitive showgoers were disappointed to discover, however, that they were only mock-ups. "Working" phones have been demonstrated at some trade shows, but they were linked by heavy cables to electronic "brains" behind the scenes.

The mood in Cannes was pessimistic and the industry's sense of foreboding will not have been lifted by last week's news that Japan Telecom, owner of Japan's smallest mobile operator, J-Phone is delaying the launch of its 3G service by some seven months to July 2002. It said the delay was due to changes to the Japanese version of the 3G standard: observers think it is because the phones will be late.

Leading Japanese telecoms manufacturers such as Matsushita, owner of the Panasonic brand, are throwing resources at the problem and are expected to have models ready for DoCoMo's planned launch in two months time. Some will have built-in cameras, others MP3 internet music players.

But, and it is a big but, they will operate on the Japanese version of w-CDMA, the global 3G standard. The European version of w-CDMA is known as UMTS (Universal Mobile Telephone System). There are small but significant differences between the two standards, which means the Japanese phones are unlikely to work on European networks. And in any case, European customers will initially demand a different kind of phone, a "dual-mode" handset that can handle both the new

w-CDMA standard for 3G and the GSM technology used in existing phones. "The availability of dual-mode handsets is critical to the success of 3G in Europe, "says Michael Ralph of the San Diego-based wireless consultancy WFI, "but I am not aware of working prototypes from any western manufacturer."

The problem is that today's customers enjoy the ability to "roam" anywhere a GSM network is in place. But it will take years for operators to complete their new 3G networks.

In the early days, therefore, there will be islands of new 3G services in a sea of old GSM. Few customers will be prepared to buy 3G handsets if they will only be able to enjoy brief moments of connection to the whizzy new services envisaged. Even fewer will be prepared to do so if the phone they buy will not also connect them to the old GSM system and allow them the benefits of "roaming" while operators complete their new networks.

But combining old GSM and new UMTS systems in the same phone is far from easy. John Haine, head of research for TTPCom, which designs wireless chips, says: "Building a dual-mode phone is a challenge because of the need to 'hand off' or transfer calls between the GSM and the 3G parts of the phone. It involves building another radio into the handset."

While there will always be early adopters keen to test a new technology, the dismal Wap experience, which last year introduced subscribers to a slow and scrappy version of the mobile internet, has warned customers off technology for technology's sake. A handset that cannot work on old and new networks would run a serious risk of falling foul of this change in sentiment.

And aside from the "dual-mode" problem, manufacturers have a host of other technical issues to resolve. The European standard for third generation mobiles, for example, is far from set in stone. Ali Pourtaheri, chief executive of Ubinetics, a British company that tests manufacturers' 3G capabilities, points out that Europe's UMTS standard, due to be published in 1999, was not released until March 2000.


Third Generation Mobiles Do Exist!

"The following quarter there were 140 major revisions. The quarter after that there were 120 and 80 the quarter following. There is a long way to go before the standard is stable." Pourtaheri thinks the first genuinely commercial handsets will not be available in quantity for another three years.

Then there is battery life. Battery manufacturers are the unsung heroes of the mobile revolution. Over the past few years, they have greatly extended talk time and standby time while shrinking the physical dimensions of the battery, making possible phones small enough to be tucked into a bikini. The higher power requirements of 3G will mean, in the early days at any rate, phones of a size that would be difficult to conceal in a Victorian bathing machine.

The screen, too, will have to be bigger and continuously backlit to cope with text and pictures from the internet. Colour will add to the drain on the battery. And, as anybody who has used a digital camera knows, a liquid crystal screen is difficult or impossible to view in sunlight.

It is easy, however, to overdo the pessimism. While the first 3G phones will undoubtedly be big and clunky and some may not work very well, in the end operators and manufacturers will collaborate to ensure that 3G is a success.

Alan Hadden, president of the Global Mobile Suppliers Association, says he believes 3G phones will be available from the middle of next year and that the combination of Wap and GPRS will provide a worthwhile "taster" for next generation services.

But the impression remains that plans to introduce 3G services have been rushed and that operators and manufacturers alike have had unsatisfactorily tight deadlines forced on them. Pourtaheri says: "We are trying to introduce 3G services four or five years earlier than we should."

alan.cane@ft.com

Copyright: The Financial Times Limited

NXT shares fall as inventive founder, Farad Azima leaves.
(FT 8.2.2001)

Shares in NXT slid yesterday as Farad Azima, the chairman and a key sharper of the flat panel audio technology specialist, said he was leaving to pursue opportunities in the internet sector.

The surprise change will see Mr Azima replaced by Gordon Owen, a longstanding board member of the group, who is also chairman of Energis. Shares in NXT fell 40p to close at 680p. Mr Azima remains a shareholder and a consultant.

Mr Azima, an Iranian-born engineer, founded Mission Loudspeakers in 1977 and 15 years later merged it with Verity Group, which subsequently became NXT, now a leader in flat-surface technology which will allow car windows and computer screens to act as audio speakers.

Mr Azima said that after the appointment of David Pearson as chief executive last year, his role had become less hands-on. "David wanted to be a front seat driver and he's done an excellent job... I was left not doing much. I thought maybe there was an opportunity for one further venture before I went and played golf", he said yesterday.

Mr Azima will step down at the end of the month. Last March, he told the independent." I miss the fraternity of British hi-fi and have this romantic view that when I retire from...public company life, I may just be involved in designing some high-end speakers once again".

He steered a different course yesterday, saying:"I am a technology enthusiast and the [internet]...has fascinated me...That seems odd because everyone is getting out of the industry, but it's not incongruous to go in at a mature level...[perhaps] to bring finance to the table". In a statement, he said he would explore opportunities in non-competing hi-tech areas.

NXT yesterday reported like-for-like losses of £6.1m, compared with £6.5m, for the six months to 31 December. Sales rose 40per cent to £2.6m.

-----------------------------

NXT founder and chairman Farad Azima caused a further flurry of selling of the flat-speaker technology group's shares after announcing his resignation.

The shares, which slumped from £24.70 at the height of the technology boom last February, fell a further 40 to 680p yesterday, despite better than expected interim results. David Pearson, who was installed last year as chief executive to allow Mr Azima to seek "wider strategic opportunities", described the former chairman as an "entrepreneur at heart".

He said: "Farad has an inventive mind, but we are now moving to commercialisation. It was his decision to resign. " Mr Azima conceded that his ambition to expand the group's interests was no longer viable, and that is needed to focus on its core flat-speaker and voice recognition businesses.

He will be succeeded by Gordon Owen, non executive chairman of Energis. Mr Azima, who holds a 2pc stake, will receive no severance pay. Losses before tax for the six months to December narrowed from £6.5m to £6.1m.

BIBA held its 82nd business meeting on the 8 November 2000 at the Institute of Directors. The tenth business meeting of the year was dedicated to ‘Technology.’ The panel discussed business opportunities in technology specifically application of next generation of micro-processor, clean fuel production and industrial manufacturing. The structure of modern economy is based on scientists creating new ideas or inventions and then industrialists, experts and professionals turning them into mass production.


Application of science is part of almost every aspect of any industry. For example, mobile phones, clean fuel, digital TV, new management systems, new risk management’s for banking and insurance, new retailing methods, new teaching methods, film-making, media, publishing, Oil & Gas, medicine, textile, design & fashion e-commerce… etc.. Unfortunately most people associate technology with mostly the electronics industries. Scientists, industrialists, experts and professionals in effect are the leaders of the modern society, not the politicians. As long as we have a systematic and scientific approach towards our business or profession, that offers new idea and added value, the business community and the public will embrace us, regardless of our background.

Dr Esmail Karimi chaired the meeting. He as an industrialist has held various engineering management positions today is an Engineering director at MAN B&W Diesel Ltd Ruston. The panel of speakers consisted of Mr Saeed Zahedi and Mr Namdar Baghaie. Mr Saeed Zahedi a medical physicist winner of the Queens’s awards for technological achievements in 1996 and Prince of Wales Award for his innovation for his design and development of intelligent Prosthesis (artificial limbs). In December 1999 he was awarded an OBE from HM Queen the Elizabeth II for services to Prosthesis Industry. He is the Researcher Manager at Blatchford a leading international firm in Prosthesis Industry. He is currently responsible for implementation and application of the next generation of micro-processor technology used in design, adaptation and operation of artificial knee hip and foot.

Mr Namdar Baghaie is a Biotechnology scientist Assistant manager at BIOFIN technologies in UK. He is involved in research and application of advanced technology to produce fuels chemical energy materials from plants. BIOFIN is aiming to become one of the world leaders in producing ethanol and electricity in its bio-refineries based on its patented technology, in conjunction with the local partners across the globe. 75% of world production of ethanol is used as motor fuel and the market is worth more than 10 billion dollars. The sponsors of the meeting were Abbas Arabi, Jamshid Fakouri, CEO, DC Group, Ali Farahani, Dr Hossein Kamyab, Cantab, Civil Eng. I&H Partnership Ltd. and Dr Imam Kamyab, QMC-Mech. MBA I&H Partnership Ltd.signup

Despite the hype surrounding Wap there is a market for this group's advanced wireless technology, writes Carlos Grande.

The ''wrap-lash'' against over hyped expectations of the mobile Internet is in full swing.

Only one in 50 UK consumers is using a mobile phone to access current wireless interactive services, according to BMRB international, the market research company.

Take-up of wrap, the most common standard for reformatting web pages for mobile devices, has been so slow across Europe that forecasts by IDC, the technology analysts, of 12m mobile internet users by 2001 now look wildly optimistic.

After the multi-billion pound spending spree by telecom companies on third generation licences, this has raised nervousness about wireless stocks for investors.

However, Jon Moynihan, executive chairman of PA Consulting, argues that all of the above strengthens the case for a £100m expansion plan by UbiNetics, the start-up found by the management consultant to sell advanced wireless hardware.

''The operators have spent such huge sums on 3G they have to press ahead with aggressive rollouts,'' he says. ''And we have the products people have been crying out for''

PA consulting invested £15m in UbNetics this week to back the expansion. Transatlantic fund managers supplied another £35m cash for a 12 per cent stake. PA retains 66 per cent.

The fundraising gives it a paper valuation of £291.6m, or just over 18 times projected 2000 revenues of £16m. A planned London listing next year should supply the remaining funds for the two-year expansion plan. It will be used to produce ''first-to-make'' wireless products that integrate voice and data features.

UbiNetics claims to have the only commercially available equipment for operators to test UMTS, the future global mobile network standard and a product line to fill in the gaps for networks until UMTS rolls from 2002 onwards.

These exclude handsets but vary from equipment for operators to consumer modems and computer cards based on General Packet radio services the technology for faster always on mobile internet access. Seventeen UK patents have been filed and it cites a further 50 patentable ideas.

Unlike many neighbouring wireless start-ups in Cambridge, UbiNetics actually has revenues: £11.5m to October 31, 2000 outstanding orders are £19m.

Fourteen telecom companies have bought the UMTS test device and Motorola, the US handset manufacturer, has ordered a modem that will provide Internet access in vehicles.

UbiNetics has designed ''clip-on modems'' to turn Palm V hand-helds into phone and Internet devices.

Care phone Warehouse, the retailer, will provide UK distribution, and Orange, the mobile phone operator, is expected to bundle them in subscription packages.

Although the company's position pits it against large infrastructure vendors such as Nokia, Ericsson and Nortel, investment banks such as WestLB Panmure identity ''huge opportunities '' for new niche entrants.

Thomas Lnager, associate director at WestLB Panmure, said: ''Big companies such as Nokia and the telcos lack enough IT staff to implement UMTS. If you are in software or services creation then you can enter the market. In handsets-forget it!''

Ali Pourtaheri, chief executive of UbiNetics, said the 22-month-old company had already turned down several acquisition offers, in favour of lifting headcount from 250 to more than 400 and opening offices in Hong Kong and Ban galore, India.

But its first real test will come this spring when it slips Palm modems in Europe, followed by the key US market in the autumn Component shortages bedevil the sectors.

''We have commitments from suppliers and contract manufacturers based on 'multiplies' of growth next year. We would only have problems if we exceeded those forecasts multiplies,'' Mr Pourtaheri said. That would make them rare indeed among wireless companies.

DaimlerChrysler, the latest manufacturer to license NXT's revolutionary flat loudspeaker technology intends to use the speakers in the panels of Mercedes cars to be launched in 2004. The agreement takes the list of NXT licences, which also includes Rolls Royce, to about 200. NXT is also in negotiations with a large mobile telephone company over its transparent speakers. This would resolve conflicting demands for smaller phones and larger screens by combining the screen with the speaker. Ericsson, NEC, Siemens and Philips are already licensees of its flat speakers.

NXT also expects to have produced the next generation of advanced speech technology products by then through 20/20 Speech, it's a joint venture with the government's Defence Evaluation Research Agency. The software can recognise anyone's voice immediately without needing to train it, and it can also operate with enormous amounts of background noise.

Even though an arsenal of 1,400 patent applications should guard eventual royalties, in 20-25 years those patents will expire and NXT will need to secure income from its brand name. As a result, the company insists licensees display its name on their products in the hope that consumers will automatically demand that label-much as they do with Dolby and Nutrasweet.


Farad Azima / DaimlerChrysler licences NXT hardware

Chahran Bolouri, the rising star in Montreal’s high-tech industry is helping to drive growth at Nortel’s massive plant located at the heart of Montreal’s technology corridor. Bolouri came to Canada from Iran in the 1970s to study industrial engineering at the Ecole Polytechnique. After graduating, he worked for a year with a couple of friends who had set up a consulting company. After a working with Dominion Textiles, a call came from Nortel in 1982. He started as an engineer and was made a first-level manager four months later, ascending rapidly through management thereafter.

As the man in charge overseeing the company’s global operations, Bolouri, 45 travels the world supervising the sale, delivering and installation of customers’ multimillion-dollar fibreoptic network. Part of Bolouris’s responsibilities includes keeping an eye on seven so-called "systems houses" - huge plants where the company brings together product design, manufacturing, new-product introduction and client support together under one roof – including Nortel‘s fast-growing St. Laurent plant, where it makes the bulk of its optical-networking equipment. In a challenging environment, Bolouri says he and his staff of 18,000 to 20,000 people must constantly question what they are doing. "it’s never good enough," he said . "We can never ever, ever stop and say we are good at that or the best at that. After the second-quarter results, the celebration lasted maybe four minutes." That attitude carries over to his dealings with clients, he said "If the customer satisfaction is below the level that we are expecting, we are believe me, quite severe," he said, without elaborating. Today as a top executive in the country’s corporate hierarchy, he’s fiercely loyal to the firm. "Nortel is not a company that I work for-Nortel is like my own company,’’ he said. ‘’That’s the way I feel about it. It’s not a place I go and work. I think of it as my own company."

Nortel and its chief rivals, Lucent Technologies inc. and Cisco System inc., are battling for dominance of the optical-networking market, where Nortel is the global leader, analysts say. Nortel expects its optical-systems unit to pull in $10 billion U.S. in revenues for 2000, while revenues from the company’s components business is expected to hit $2.5 billion U.S. this year, up 200 per cent from last year. Since last November, the company has spent $2..56 billion U.S. to expand its global production capacity. As things stand, one employee at Nortel is designated as the contact person for each customer. To bring recently acquired firms like Boca Raton, Fla –based Qtera Corp. into the Nortel family, the company has a step-by-step plan. First, "we want to make sure that they all have Nortel Networks badges and access to our E-mail and our networks," he said. –U.S. regulates have approved Nortels’ $7.8-billion (U.S.) all-stock purchase offer of July 28 for Alteon WebSystem, a Silicon Valley company whose technology speeds up internet traffic. As Internet use continues to explode and electronic commerce grows in popularity, demand is expecting experiencing growth. All of this seems designed to make Bolouri’s life even more hectic than it already is. "That’s why I have all the (Internet) connections" at home, he said. "Depending on the time zone, I can have a meeting at 6 o’clock in the morning or a meeting at 8 o’clock at night."


Chahram Bolouri

There is no doubt that NXT Plc (market capitalisation: £1.5bn) has caught the market's imagination. Here is the success story of a business that has transformed itself from a holding company for brands in the cottage industry of British hi-fi into a business with technology capable of incorporating a mobile phone's loudspeaker into its facia.

NXT is also developing speech recognition systems, and a deal with the Ministry of Defence. Investor's can hardly believe that the share price has risen six-fold since November 1999. Farhad Azima, its chairman, is just as baffled. Three years ago he took the decision to focus the company's efforts on developing television screens that serves as loudspeakers. On February 14th, 2000, BIBA attended NXT's interim meeting at the Grocery Hall, London and had the pleasure of witnessing the products that propelled the shares to stratospheric heights.

that he planned to separate the roles. The appointment of David Pearson, former managing director of Sony UK, as chief executive will strengthen the board further. Hints of forthcoming partnerships with Ericsson for its SoundVu screen-speaker franchise is welcome news. The flat-speaker area opens scope for others- notably automobile manufacturers and other mobile manufacturers - to join the bandwagon.

In a recent INDEPENDENT article NXT PLC was tipped as a company "worth a punt" despite the competition and the risks that exist with any technology stock these days. Financial Times readers will have the chance to vote for the shortlisted nominees in the PLC awards of which NXT features under the "Best Technology Award" category.

Prestige Network was last featured in the November 1998 issue of BIBN, with news of ground-breaking software developments for Handheld & Palmtop computers operating on Microsoft's Windows CE platform.

So, how does Shohreh Khorassani, Managing Director, view the company's performance during the last 12 months?

"The partnership between Prestige Network and Microsoft has been extremely rewarding - our expertise in the foreign language software field coupled with our commitment to Windows CE has led to website links between the two companies, offering our customers foreign language abilities within their favourite Microsoft products."

What of Prestige Network's other spheres of activity?

"Our position as UK leaders in multingual software has been recognised by all of the major software manufacturers. As well as the existing Microsoft approval, we now have similar agreements with Apple, IBM/Lotus and Quark to name but a few".

The UK's increasingly close commercial relationships with Europe and beyond has led to higher demand for foreign language version software and hardware. Our long established contacts throughout not only Europe, but worldwide, have enabled us to satisfy our customer needs."

"Since December 1998, this area of the business has seen steady growth, and has led to expansion within the Company. In the last 2 months we have taken on add tional staff with linguistic abilities to further enhance our in-house expertise and back-end services such as language translation. This, together with our ongoing staff training programme, is just part of our commitment to offer our customers excellent service backed by sound technical and linguistic knowledge."

Prestige Network's website has also expanded and changed considerably during the last 12 months - "Yes, we see this as a major development area for the future" says Shohreh. "We are already offering an on-line ordering facility for all of our products, plus an on-line translation service. In-house web design/management capabilities mean we can change the site daily (or even hourly) if necessary to take account of customer feedback, new product developments, special offers, etc. We also plan to make it possible to download demo versions of some products, and we already have some full products which can be despatched electronically to our customers."

Prestige Network's website can be accessed at: www.prestigenetwork.com

Prestige Network Ltd., Unit 9 Thatcham Business Village, Colthrop Way, Thatcham, Berkshire RG19 4LW Tel: +44 (0)1635 866888 Fax: +44 (0)1635 866810 E-mail: sales@prestigenetwork.com

The topic 72nd BIBA Regular meeting was 'Engineering and Manufacturing', which is arguably the most difficult field to cover concisely due to the depth and number of different fields that fall into this category. At this meeting, sponsored by Afropol Ltd, BIBA tried to cover what we felt were three of the most interesting areas; telecommunications, car manufacturing, and oil & gas. The experts in these fields were Dr Zohreh Bahrami of Nortel, Mr Kamran Naghdi, Managing Director of BMS Automotive Ltd. and Dr Manouchehr Takin, Oil Analyst at the Centre for Global Energy Studies, and Mr Shahideh Vice-President of Bechtel International as Chairman.

Telecommunication -

Dr Bahrami spoke first of her experiences in Nortel as they try to penetrate different markets, and she shared some of their strategies with the audience:

" Before entering a market, a company has to make sure that its product portfolio is right for that market. Moreover, it is very important to make sure that its market share is maintained not only in the present time, but also in the future.

Nortel uses that strategy to good effect. When they wanted to enter Britain, they bought SDC, a British company. They then looked at what other markets were core or strategic to their business. They decided that Germany and France were, saw the way to go forward was with joint ventures. Another country was China, with its extremely fast-growing market, and Nortel could not have penetrated it on their own, so they had to look at the local expertise. Israel and Turkey are another two countries highlighted. So the ethic is 'think global, act global'. In order to actually be successful in the global market, you have to work in the local market, because they have the local expertise. Since this summer, Nortel have actually been looking at Iran as an emerging market, and we were there this summer. It is a little bit tricky because there is still an embargo on Iran, and Nortel has a lot of investment in the US. So on the one hand they do not want to jeopardise their relationship with the US but on the other hand they do want to get into Asia. So there is a lot of pressure to get into Iran. One of the conditions that Iran has put is that in order to do any business with any suppliers, you have to work through a local company. So we had to identify a local agent. I personally do not believe that technology is transferred to a lot of these markets. What happens is that a lot of manufacturing facilities, and within these a lot of assembly takes place. So we use a lot local labour there. This is cheap and it helps to get into the good books of the government."

Car Manufacturing -

Mr Kamran Naghdi, speaking on the importance of technological advancements in the automotive business:

We engineer automotive assembly parts, and we supply to emerging countries including Iran. We have a factory in Dagenham, and we have developed a technology for making chassis much cheaper than conventional systems. With large businesses that assemble cars, you are talking about an investment of £300-£400 million. We are not in that kind of bracket. We mostly address emerging markets, and we have developed a package to make 5,000-10,000 cars a year. Making cars is a serious issue in terms of safety, so we have designed a chassis that has been simulated, crash tested, and so on. The other aspect is that we have reached an agreement with Renault in France which states that everywhere in the world that we offer our packages for automotive assembly, we are automatically allowed to offer Renault engine gearbox and components. Finally, the last aspect is the construction of the body. Through many years of travel and research, we eventually noticed that the parameters of making plastic cars is in the region of 1000, because it is complicated and time-consuming. So we have recruited experts from France, and with our knowledgeable experts here in the UK, we have developed a system whereby we take composite parts to make 5,000, and it can be extended to make 10,000 or more. We have developed this technology in our own factories and it belongs to us. So this is one of the packages that we have to offer to our customers. One of the most important things is to obtain a certificate of road worthiness, so that once a car is made it can legally be taken on the streets. So for every car we develop for overseas clients, we make specific standard prototypes representative of the technology in every aspect. There is a very expensive and time-consuming process involved to pass this test, but fortunately we have passed with flying colours.

We also have 4 or 5 separate bodies, in order to help us speed up our production rates. One of the most important things is that we had to look at it realistically and accept that we are not in a position to compete with the Fords and the General Motors and other major manufacturers. So we developed a niche, and a philosophy. I am sure that you have all noticed that there are a lot of ladies driving four-wheel drive cars. Now these are heavy, expensive, consume a lot of petrol, and most of them don't even know how to use the four-wheel drive option. We have gathered through market research

(52% of all cars in the US are 4-wheel drive, and 27% in Europe), that there is a desirability for cars that look like jeeps, fulfil the same functions but are not as expensive. So we have developed a front traction jeep look-alike vehicle which costs at least one third of the price of conventional jeeps, is much more environmental friendly, is cheaper to maintain and so on. We have sold a package in Iran and it has become a success, and is a national project. We are also marketing this package in several other emerging markets. The problem with many of these countries is that there is no ECGD cover, so there is no insurance available, and they demand financing for the projects."

Oil & Gas Industry -

Dr Manouchehr Takin gave some insight to the relevance of the transfer of technology with respect to the oil business.

"Both of these companies that you have just heard about have shown that the transfer of technology is a tool used for the expansion of their businesses. On the other hand there is the issue of trade, and of course these companies want to trade their products. Throughout history, different countries have had different things to offer, and it is through trade with each other that they flourish. Emerging countries are in need of that technology, but there must be gain available to both sides before any transaction is made. In order to utilise the technology, there also needs to be a lot of hard work from the recipient. But it is important to do things correctly. For example, there is a big difference between selling fish, and teaching someone how to fish. In the second scenario you have lost your business completely. So the transfer of technology is not really a simple topic.

Now to relate this to oil and gas. In general, for emerging economies, I think it is fair to say that many of them, having had oil and gas supplies, nationalised the industries. As a very general statement, these countries wanted to gain control of own resources. They have had many years now to generate revenues, and we are in a position to view their success. I think that, generally, a lot of these countries started out very well, but over time they have become like government or civil service organisations. They have lost efficiency, commercial business attitudes, structure and business growth. Most of them have become safe employment institutions. This is a conclusion that many of these countries are now accepting. And there has been, to some degree, underinvestment in these industries. Underinvestment came about because after many years of having foreign oil companies running the oil business, the treasuries were used to receiving a lot of funds from them. After nationalisation the expectation was for these funds to keep flowing. It was difficult to convince the public that the industry requires investment to continue. So at the beginning there was a notion that there were enough materials to keep going, but after a few years they began to notice the shortage of spare parts. In the same way, in order to keep up investment, you have to employ technical graduates, maintain proper personnel planning for the career development of these people, provide proper technical training and so on. This did not sufficiently take place, partly due to the lack of investment. In a sense, they wanted the cow to keep providing milk every year rather than spending on it. Therefore after a 20 years or so of underinvestment, the standard of these industries has deteriorated, and one has to now compensate for this underinvestment. So they will all now acknowledge the need to bring in international investment and technical know-how again. There are of course different ways to do this. Some are using joint venture schemes, some production sharing agreements, or buy-back schemes as in Iran's case. Some countries, like Iran and Venezuela have already started these operations, but there are still those like Mexico who are holding on the nationalisation method. But sooner or later they too will probably go through this phase. I would like to emphasise the need not only for technology, but also for capital. For example, Iran needs about $2 billion dollars a year investment just to maintain its oil and gas industry. But when the industry is a governmental organisation, annual budgets need to be drafted and approved, and the industry needs to compete for funds. And because of all the years of underinvestment, they need more money. Now had they not nationalised in the first place they would not have need so much money. So you need capital to invest in the technology, maintain it, manage it, and train young professionals to work together to create further advancements.

Now, I would like to discuss the other side of the coin. That is, of course, the multi-national companies who would be doing the investing. They too need capital and technology. Capital, of course, can be provided by banks. There are many high-tech companies around the world, and if you have the funds, then you can buy the technology. So what is the role of the oil companies in this? The companies, once they have signed a contract for doing exploration or developing an oil field, go to large service companies to actually do the operation. There are companies like Bechtel who are the major contractors, and if countries like Iran suddenly had the funds, they could go directly to service companies like these. But there is a third thing, other than capital and technology that is important, that oil companies such as BP can provide, but service companies like Bechtel cannot, and that is making an investment and then waiting for a number of years to start making money back on it. The Bechtels and Schlumbergers provide a service, charge for it, and then it is over. But there are now a large number of service companies who have already gone into providing finance. They are competing with the oil companies."

Mr Parviz Shahideh, with the final speech of the evening, speaking a little of his own experience in Bechtel:

"There are certain trends that one can discover, having heard the previous speakers. One is the fact that there is a local content when any technology is transferred, or any investment is pumped into an emerging economy. The same issue is relevant in terms of the oil industry. Dr Takin talked about the bureaucracy that nationalisation has created, but there is an undercurrent everywhere about the local content, engagement of local labour and so on.

This is the area that companies like Bechtel are targeting in emerging markets by creating joint ventures, specialist groups and so on. I agree with Dr Takin about the need for capital. The difference between companies like Bechtel and BP is the question of risk management. BP, and similar companies, have a very large investment backing so they are capable of affording the risk of development and so on. It is a very risky business. The major service companies usually do not take this risk. These are the areas that Bechtel and Shrumberger have begun to go into now. In fact, the two companies have an alliance now, and they go mainly into mainly the fields that national oil companies have messed up. These fields can handle the new technology. Taking the risk with these fields creates the opportunity of financing. This way of thinking is the background of many of these ventures, including the buy-back schemes in Iran"

Once the speeches were over, the customary question and answer session took place, with all members of the panel participating.

(Q) "There is a formula that most companies follow when it comes to investing in other countries, and that is to invest in a country with high population and high GDP. Countries in the North Africa and the Middle-East are generally low population and low GDP, with the exception of Dubai which has high GDP. So there is more incentive for investors to look to India or the Far-East. Should Middle-Eastern countries, for example, change their attitude?"

(PS) "The market is determined by the level of consumption. Therefore it is not a question of attitude. Rather, it is a question of marketing and market demand that dictates this."

(ZB) "Absolutely. In the case of telecommunications, it is becoming more and more obvious that peoples lives are going to be affected greatly by new technology. For example, the emergence of the internet has already changed peoples lives greatly, and boosted telecommunication companies as well because of the extra telephone lines that people need. So they look at that potential of growth in demand as well, and take it into consideration. Wherever there is demand, there is room for investment. As was mentioned before, a risk sometimes has to be taken in going to countries like Iran."

(Q) "Referring to the previous question, should the GDP and population be taken so much into consideration, bearing in mind that in a country with low GDP, operation costs would most likely be less, therefore enabling exporting and sale from that country? In other words, should the decision not take into consideration the global situation as opposed to a particular country's one?"

{MT) "Each company, depending on the service they provide, do their own market research, look at future growth, capability of payment for those services. So although India and China may have large populations, if you are providing a luxury good that is not the place that you should go to the Middle-East or Dubai, although there is low population, there is a high GDP and people can actually pay for it. There is no general rule. It depends on the company and its goals. But for the oil and gas sector, there are natural places that attract interest, and that is North Africa the Middle-East. So the companies that have the resources to invest in oil and gas are prepared bear the risk."

(ZB) "A lot of countries, especially Spanish-speaking ones, put in between the lines the clause that local workers have to be employed. Some companies happen to be extremely good at that, but others like Nortel are not so good at that so they are generally not that interested in these countries. The other thing is that at an operational level, to get manufacturing facilities to produce products that pass all the secondary tests which are very difficult."

(Q) "The way that companies are investing in training local workers implies that they are thinking in a more long-term way. Is this not different to a few years ago?"

(MT) "I think that the motives have changed. I made a general statement before about the weaknesses of the nationalised oil countries, but really there have been many that have been very successful. They have had proper personnel training and development and are now moving ahead and competing internationally. But even those companies, in some sectors, might like to have foreign companies coming in. So most of these have now acknowledged their weaknesses, big or small, and are now working on correcting them. This involves continued research development and proper employment. So many are thinking more long-term."

(Q) "Do these countries have to de-nationalise the oil industries in order to make them successful?"

(MT) "To answer that, we must look at how these countries used to be before nationalisation. At that time there were the 'Seven Sisters' who were controlling the production of oil. They were a monopoly controlling the whole oil market. In the case of Iran, if Iranian oil was going to India, it used to be priced at the price of oil from the gulf of Mexico, plus the freight rate from Mexico to India. They divided the world so that they would not compete with each other. They made huge profits and became huge international projects. But more importantly, they had an immense amount of political influence. These companies had concessions, meaning that they had a huge part of that country under their control. Nationalisation was a reaction to the excesses of those companies before nationalisation.

Now, there is a lot more experience on everybody's behalf. The case is not de-nationalisation, but some sort of business transaction differing with respect to that country's policy. The way that the contracts are arranged between these companies is different to concessions. They give the company specific fields and jobs, and they are supervised correctly. So the 'Seven Sisters' no longer monopolise the industry. There are many companies providing competition. "

(Q) "But if incentive is to provided for investment, surely creating shares as an offering is much more attractive to the potential buyer than relying on the unpredictability of governments."

(MT) "That is a proposal that many back. The Russians have done part of this. Brazilians have as well. I don't think that the Middle-Eastern market is ready for that yet. There is still a sentiment that the oil is a national resource, and it belongs to the nation and the people, and they don't want to give it over to the hands of profiteers."

(PS) "It is a fact that the returns in investment in the oil industry are marginal now compared to the other industries. The question is, as an investor, do you invest in the oil industry in Iran, or invest in for example Mr Naghdi's car 'Sultan'. If you look at the return on investment in the free market, naturally you would go for 'Sultan'. That is why a lot of the major oil companies are changing. They are not interested in refineries any more as the margins are very small. Nobody would invest in them any more. It is really in the high-risk areas that there is still good anticipated return. It will be mostly about the big oil companies, because they are the ones that are going to take the risk."

(Q) "With the rate of change of technology, how do companies like Nortel safely invest in a country without knowing whether their product will still be in demand by the time it is produced there. Is there some safe way for the two sides to come to agreements guaranteeing them both success? "

(ZB) "This is a very important issue. There has been a major cultural change within Nortel called the 'right-angle turn', because in the past it used to take a long time to develop a product, and they are now trying to speed the process up. But how to actually transfer this technology, these processes, this knowledge, to emerging markets is a problem. Firstly you need a receptive mind at the other end to appreciate the changes. Nortel itself has moved rapidly around the world in the last ten years. In countries like Iran, to be ready for this change is the important thing now. It is impossible for these countries to start thinking about privatisation now, because without it they will not be able to compete in the future. The onus is on the countries."

The evening was brought to an end very eloquently by Mr Shahideh, who gave this short conclusion:

"We have not actually defined what the transfer of technology is, as there are differing views on the exact meaning of 'technology'. It seems that the sale of arms is the most widely used method for transferring technology! The second thing is distinguishing why companies like Nortel are staying ahead of the change. I don't think that it has as much to do with the emerging markets as it does with the competition. As soon as companies become global, they have global competition. They have to continuously re-engineer their work processes to stay ahead of the competition. This is what distinguishes the successful companies from the rest.

On the 30th November 1999, shares of NXT soared 71% after the technology company unveiled a ground-breaking joint venture with the Defence Evaluation and Research Agency (DERA), part of the Ministry of Defence. The company's stock market value increased by some £360 million to £850 million after the group which makes flat-panel speakers revealed that it is to create a new company with DERA to take advantage of speech recognition technology being developed for use in military aircraft and battletanks. Mr Farhad Azima, NXT's Chairman and Chief Executive, had earlier in the year attended BIBA's general meeting to discuss the future of his company.

Here is a transcript of a Q & A on 16th April 1999 of Farhad Azima

"First of all, I would just like to say a few words. I have been away from the old country for a long time, and I am very privileged to be here tonight. I have been out of touch, and there has not really been an opportunity to come and meet everybody. I am not here to promote the company or what we do. I am here to share my thoughts and ideas with you, and to see if any of my experience may be found useful”. Farhad Azima, 16 April 1999, at BIBA GM.

(BIBN) How did you get into this business?

(FA) We started with Mission. This was the company that I started. There was really no great vision as such. I had a spare bedroom that I had to use for something, and that is exactly how I started, with 2 or 3 people. The company grew and became modestly successful. The top end of our business has done well, and of course we export products as well. 70-75% of what we produce goes to Europe and North America.

(BIBN) There are many people in your line of business, but they are not as successful as you. To what do you attribute this success?

(FA) The success of the company that I run today, NXT plc., of which Mission is a part, is due partly to good fortune, and partly to the long-standing commitment we have had to research and development. NXT has grown 10-fold (16th April 1999) in the last 2 to 3 years as a public company here in London, and the reason for this is the new technology that we have produced. This is based mostly on loud-speakers which are completely flat, which is quite unusual, because historically loud-speakers have always operated within an enclosure. The origins of the idea came from DERA (Defence Evaluation Research Agency), which is an agency of the ministry of defence, and is the unified agency for all the armed forces for research and development. They were working with technology to silence the inside of military helicopters and aircraft. You can imagine, of course, that one day all this will be possible. It will be like star wars, where they will get rid of all the headgear and ear-defence and inside the aircraft will be very quiet. That of course improves the tension span and so on, and will therefore be very desirable. In any event, through this noise-cancellation research, they developed some early ideas, which our technology is based on. If you read a lot of the dearer press, including last Sunday's Sunday Times, you will have read that NXT was developed by them. In fact, that is not quite correct. 90% of the technology came from our own people. But certainly we do this somewhat in partnership with them. This technology is too big for us to exploit and manufacture, and it is through our humility, knowing full well how niche we are, that we decided in early stages to license this technology . So now the company has 88 or so licencees worldwide, including companies like NEC, Fujitsu, Siemens, Samson, and Phillips. Each one of those companies is greater than our own group, but they are licencees of this unique technology. The technology is protected by a huge body of IPI, our patents are intellectual property.

(BIBN) How do you approach the mass consumer electronics industry?

(FA) The products of group companies such as Mission are high-fi products with domestic applications. The re-invention of our business from those beginnings to the NXT of today means it is now a very different business. The minutest applications for our technology would be domestic high-fidelity. The applications are huge in all other areas such as multi-media or automotive. We are working on highly minitiaturised flat speakers to go into cellular telephones, which would be a unique achievement. No cellular phone today has a loud speaker capability. So these are huge new opportunities. Important technology not only replaces its predecessor, but also introduces new applications. Now I am not comparing it to the importance of the transistor, but as an example, what the transistor did was to make the mobile telephone possible. So that is important, and NXT has the potential in architecture. We will not see the speakers, they will be embedded and will disappear.

Technology -

(BIBN) How do you make the transition from technology and innovation to commercial and manufacturing?

(FA) I think marketing is a very important component for what we do, and it would be foolhardy to think that without marketing any technology, however superior it may be, would succeed. However I am not particularly good with the manufacturing process so I have no great advice. What I could share with you is that the crew in the company are like my own extended family. I feel very close to them, I communicate with them, right down to factory level. I even taught quite a few of the production personnel to ski. This is quite different to the tradition of British industrial management, and the contentious advisorial relationship between management and workers. But now we do not have that problem, as other people do the manufacturing.

Manufacturing today in the UK is quite a difficult business, and there are quite a few manufacturers who have shareholders and no longer manage their own business. Technology is the future in this country.

(BIBN) Of all your products, which is the major growth area? And what proportion of your business is based on flat speakers?

(FA) As part of the redefining, or repositioning of our company, the astonishing thing that I can share with you is that the company, back in the early 90's, had a turnover of around £50 million, and profitability of £3 million. It had a market valuation of around £15 million. Today (16th April 1999) all we do is to sustain huge losses. Our losses are running at around £8-£9 million pounds a year but the value of our company has gone up around 20-fold. This is the nature of technology. A lot of companies, such as biotech and internet companies, are hugely overvalued and are unlikely to make any money in the foreseeable future. They are often raising money for research on the assumption that maybe in 5 years time they would have a cure for cancer, or something else. Equally, there is plenty of technology that does not have a home, no real application. NXT has a technology that works. It is beyond laboratory processes, and our licencees will enter mass production with it in the next year or so. So really, I can't give you any comparisons as such. What I can say for all of us is that, whatever business you are in, it is important to re-invent it all the time, because the pace of change is so great that we cannot possibly resist. It is very important to introduce vision.

(BIBN) Do you still work on audio technology?

(FA) Yes, we are working now on bringing together our audio technology with our display technology. Of course you are aware of flat screen televisions, flat LCD products, laptops and so on. This is where we are fortuitous in terms of other technologies contributing to demand. You will not have a flat screen television 2 or 3 inches on the wall and have 2 great big boxes on the floor. So we are now looking at display technologies beyond gas plasma and beyond LCD, and I should mention (this is public domain information) that an enormous amount of technology will come from DERA. They employ, I am told, over 10,000 scientists. I think they are quite open-minded in encouraging companies to look at these technologies with a view to commercial exploitation. So you can imagine they have enormous knowledge in flat display stuff, and we have also, in terms of widening our horizons, had some quite successful activity in Finland, and we now have some activity in Russia. So eventually, if we could offer a panel that could have sound and vision, then that is the very definition of multi-media and the future of hand-held devices, right through to telephones and computers. So many different applications.

Licencing NXT technology -

(BIBN) Rather than having this open licencing policy, is it not better to deal with just 1 or 2 companies and make them feel exclusive?

(FA) If you have intellectual patents to license, and many bright compatriots of mine will have in years to come, the concept of open licencing is the safest and the best way. It is crucial that companies respect your integrity, and the royalties that one company pays will be the same as any other. If you force them, by the process of exclusion, to come up with competing technologies, or just blatantly infringe on yours, they will, because it is impossible for these companies to go without certain technologies. It gives you protection against infringement. If you happen to become market dominant, as with Microsoft, it gives you protection against anti-trust. That is to say that anybody can come to me and I will license my technology. I am not exercising a cartel. We have to be open minded, open hearted, and share what is good.

(BIBN) Could you share any of your bad experiences that could be of use?

>(FA) In day to day business there are many bad experiences; manufacturing problems, industrial accidents and so on. Your question is a very hard one to answer, but I would say that my nightmare is competing technologies. Having to deal with these huge companies to license our technology and not to reverse engineer it and pay royalties may be a difficult task. One suspects that companies may try to do that. On top of all that, some companies find it quite insulting that they have to license the technology from a much smaller company

(BIBN) What is your opinion about NXT's share performance in the stock market? (16th April 1999)

(FA) When people I know buy shares in NXT, I feel very vulnerable and unhappy. This is because our business is high technology and high-risk. Should things go well, all these friends and associates will be content. Should things go badly, I would never forgive myself, and I should never be put in that position. At first, when the size of our technology grew and our share prices started to rise, I was very upset. I contacted my advisors in the city to tell them this was too risky. I bulletted my warnings in the AGM statements and so on, public domain information, very available. In any event, they eventually told me not to be stupid, and that I was dealing with very sophisticated institutions, with analysts here and in Wall Street who have such depth of knowledge, such depth of research. It is their risk, I do not have to worry about it. I cannot tell you not to invest in NXT, that would be equally wrong, but I would not encourage it. In what I said I am very sincere. I cannot possibly have an ulterior motive in that. Risks are very high. We are two and a half years into the launch of the technology, and we have produced no less than 20 or 30 major scientific papers, delivered at AES conventions (Audio Engineering Society) worldwide. A huge amount of these have been published by patent offices around the world, so basically we are a bit more secure in that our technology has been somewhat publicly audited. But you are never fully secure in the technology business.


Farhad Azima - Chairman & Chief Executive, NXT Plc