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High Tower in Licensing Deal With Anaheim Company

Aliso Viejo-based High Tower Software Inc., a maker of security software for businesses and governments, has struck a licensing deal with another local software maker.

It struck a three-year pact with Anaheim-based Encryptanet Inc. to use its software in a line of network security monitoring systems.

High Tower’s software acts as another layer on top of existing security software such as firewalls and virus blockers.

Encryptanet makes software that uses what’s known as digital certificates to control access to a network.

The software makes it easier for companies to limit access to data without using separate password logins or having employees scan an identification card.

High Tower is set to use Encryptanet’s digital certificate application in its own software.

The company was started in 1999 by a group of researchers from NASA’s Jet Propulsion Laboratory who had developed software to analyze data from satellites.

New York-based private equity firm Liberty Partners bought a majority stake in High Tower in 2000.

In 2005 it brought in a management team to “take the fledgling company and turn it into a revenue-generating organization,” Chief Executive Cleve Adams said.

Adams was cofounder of San Diego’s Websense Inc., an Internet security software company that went public in 2000 and had a market value of $830 million last week.

Two vice presidents at High Tower also came from Websense.

High Tower has about 50 workers in Aliso Viejo and an additional 20 salespeople around the country.

Roughly 20% of its customers are government-related, including the Army, the Department of Defense and various state agencies.

The balance is made up by banks, universities and corporations.

Local customers include Fountain Valley’s Kingston Technology Corp., Newport Beach’s Downey Financial Corp., Costa Mesa’s Automobile Club of Southern California and Children’s Hospital of Orange County in Orange.

The company saw $4 million in revenue in 2007. It expects to see roughly $12 million in sales and to turn a profit this year, according to Adams.


Quest: Good Start, But Concerns

Aliso Viejo-based Quest Software Inc. is off to a good start this year despite shakiness among technology stocks, according to an analyst.

“After meeting with Quest’s management, it appears the company has gotten off to a solid start in 2008,” said Richard Sherman of Greenwich, Conn.-based MKM Partners LLC in a note to clients. “Quest has not experienced a slowdown in its business despite growing concerns about economic conditions.”

Sherman did raise concerns about Quest’s habit of buying lots of small companies and adding them to its lineup of business software products, which boost the performance of databases, e-mail and other programs.

Sherman noted that Quest’s operating profit could take a hit.

“We remain cautious about declining margins, which could fall further with additional acquisitions,” he said.

Wall Street might like to see Quest take a breather on its buying binge, Sherman said.

“We think fewer acquisitions, higher margins and a share repurchase program would be viewed more positively by investors,” he said.


Thiel Deal

Los Angeles-based private equity firm Triton Pacific Capital Partners LLC, which has an office in San Juan Capistrano, has struck a deal that has a local tie.

Triton bought a majority stake in Greenville, S.C.-based software company AssetPoint Inc., which spun off from Fluor Corp. in 2002.

AssetPoint makes software for manufacturers that helps boost profits and improves productivity. Its programs help automate some maintenance processes and help manage assets.

Orange County technology entrepreneur Fred Thiel, who now heads Triton’s software and information technology group, led the deal. He’s set to join AssetPoint’s board.

Thiel was chief executive of Irvine’s Lantronix Inc., a maker of small electronic devices that allow vending machines, thermostats, retail terminals, ATMs and others to be accessed via the Internet or other computer networks.

He left Lantronix in 2002 along with founder and former chairman Bernhard Bruscha and financial chief Steven Cotton after the company got into hot water with the Securities and Exchange Commission.

After leaving Lantronix, Thiel became chief executive of Costa Mesa-based online game and media company GameSpy Industries. He helped sell the company to San Francisco-based IGN Entertainment Inc., which, in turn, was bought shortly after by News Corp.’s Fox Interactive Media Inc. for $650 million.

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