It’s Orange County’s fastest by being the last to slow down.
Starbase, a maker of a software that allows Web page builders to manage both code and content at the same time, grew sales 1,481% over the past three years, going from $2.95 million in the 12 months ended June 30 1998 to $46.65 million in the 2001 period. That was enough for Starbase to claim the top spot on the Business Journal’s list of fastest-growing OC public companies.
But while the company’s June quarter sales grew some 71% from the prior-year quarter, they may finally have hit the wall already encountered by most other tech firms: revenue decreased sequentially, to the tune of 27%. Company executives attributed the decline to customers delaying purchasing decisions until they get more visibility.
In the first half of the year, the company continued to pursue its growth-by-acquisition strategy. Starbase acquired worldweb.net and Technology Builders Inc. in the winter, as it sought to grow its product base and improve its sales and marketing team. Starbase executives did not hesitate to use an expansion method employed by fellow fastest-growing company Broadcom Corp., purchasing both with stock.
“With these acquisitions, Starbase has taken a quantum leap in establishing itself as the elite provider of comprehensive, collaborative solutions for both the development and management of content and code,” said Starbase Chief Executive William Stow. “Our greatly expanded sales teams will pursue multiple cross-selling opportunities to hundreds of new and established customers.”
The acquisitions also gave Starbase some key engineering talent, company executives said. That increase in staff, coupled with other recruiting efforts, resulted in the company expanding its OC headquarters.
“This past year has been an exciting one for Starbase,” Stow said at the time. “We have acquired three companies in the past 12 months. As a result, the number of people employed by Starbase has more than doubled, requiring additional sales, support and research and development space.”
Starbase also grew by beefing up sales and marketing staffs, filling out management positions and honing the company’s message. In March of last year Starbase released the newest version of its flagship product, StarTeam 4.2, which enables designers to put together so-called “third generation” Web sites.
Still, it’s not certain how the company’s business will fare in the downturn. In the June quarter in which sequential sales fell, Starbase also lost $13.7 million before non-cash items on sales of $12.05 million. Wall Street’s opinion has soured in kind. Since June, Starbase shares have lost more than 90% of their value, going from $10 to a low of 60 cents. This devaluing of its currency, again as with Broadcom, likely forces the company to pull in its acquisition horns.
Still, the company remains positive.
“We feel we have a competitive advantage,” Stow said. n
