Concord Firm Deciphers Year Ahead
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One of TCC's products is the HSE 6000 Headset Encryptor, which is battery-powered, portable device that encrypts radio communications.
Concord-based Technical Communications Corp. (TCC) makes encryption systems that ensure government and military communications – including those of Afghan security forces – cannot be intercepted.
It expects demand for its products to grow in the long term, as governments become more concerned about data security.
But coming off a down fiscal year that ended in September, TCC is bracing for more of the same over the next six months it said. The problem? Unrest in the Middle East.
Slow Start
TCC, which employs about 36 people in its Concord headquarters – its sole facility – markets its encryption systems mainly to government and military uses, but says financial institutions, telecoms and multinational corporations have also found a use for encryption.
TCC saw first-quarter revenue fall 64 percent year over year to $1.6 million. The decline helped drive a loss of $310,000 compared to a profit of $929,000 a year ago.
Carl Guild, Jr., president and CEO of TCC, said first-quarter revenue fell short of objectives due to continuing delays in the awarding of planned contracts. Though the company did not provide details on the delayed contracts for the first quarter of 2013, it said in its annual earnings report in December that political unrest in the Middle East had turned foreign government attention to more pressing matters and delayed contract proceedings.
Guild said the company anticipates those contracts will come late this fiscal year. But for now, TCC is playing the waiting game, expecting sluggish revenue for as long as the next six months.
Three new products will enter full-scale development in the middle of this year. TCC is partnering with original equipment manufacturers, or OEMs, to embed its encryption systems in their devices. The strategy behind the collaborative approach is allowing major technology providers to take TCC products to market, TCC said in its financial reports.
Annual Numbers Falling
After hitting a peak of $21.6 million in revenue in 2010, TCC has seen its sales – and profits – fall since.
Its fiscal 2012 loss of $841,000, compared to a profit of $2.3 million in 2011 and $7.9 million in 2010, was due to a 33 percent drop in sales during the year, which were $8.1 million, and increased spending on research and development.
TCC expects to cut its R&D spending by 25 percent this year, and indeed it contracted by $215,000, or 20 percent in the first quarter.
Its stock price has also taken a hit. As of the close of the market on Feb. 13, its share price was $4.52, down from a peak of $12.65 in March 2012.
During 2012, TCC received an $857,000 order for radio encryptors for use in Afghanistan, a continuation $7.8 million shipped in 2011, comprising nearly all sales that year.
In 2012, TCC also received a $1.2 million order from Raytheon Corp, which has operations in MetroWest, to continue its upgrade of Patriot Missile Systems in Taiwan.
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