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Signs of life – Colorado’s tech sector starts to stabilize as battered firms slowly begin hiring

After axing tens of thousands of jobs over the past three years, Colorado’s technology-related industries are showing new signs of life.

By Roger Fillion, Rocky Mountain News

Companies in the software, data-storage, cable-TV, aerospace and Internet industries are among those hiring people since April, an informal survey shows.

It isn’t a tidal wave of activity, by any means. And layoffs are expected to continue – including among companies such as the former J.D. Edwards of Denver, which was bought by software maker PeopleSoft last month for $1.8 billion.

But the pickup in hiring interest and activity in recent months is noticeable, according to industry executives, job recruiters and job hunters.

That has fanned cautious hopes that Colorado’s battered tech-related businesses are at least stabilizing – or perhaps starting a gradual recovery that would lend support to the state’s sluggish economy. The topic is likely to come up Friday at a state-sponsored tech summit in Denver.

"People are hiring more than they’re laying off. They’re not hiring in huge waves," said Judy Kennelley, president of Integrity Network, a Denver job-recruitment firm that specializes in placing sales and marketing executives in tech jobs. "I think slowly we’re starting to see a little bit of momentum build."

Jeff Thomas’ experience bolsters that view.

When the Broomfield software startup Thomas was working for shut its doors in April 2002, he scanned Colorado’s employment landscape.

Thomas then made a quick decision. Rather than try to land a new full-time tech job, he’d start his own business doing Internet-related consulting.

Why? "The job market didn’t look good," he said.

He had learned quickly that big Internet job sites weren’t helpful and were even posting bogus leads. One Colorado friend in the job-recruitment business had lost his own job. Another recruiter’s list of client companies was slashed in half.

Moreover, colleagues who were hunting for tech jobs in early 2002 were coming up empty.

"I’d known people who’d been out of work for two to four months and hadn’t been able to get any interviews," recalled Thomas.

He managed to eke out a living doing contract work for various companies. It wasn’t great pay. Thomas and his wife slashed their spending – even cutting their Christmas gift outlays last year to one-quarter of the usual amount.

But in the past few months, conditions have changed. In late June, -Thomas picked up a bundle of contract work from LeftHand Networks, a Boulder maker of data-storage equipment. There was so much work that he farmed out other jobs to friends.

Recruiters also started calling.

"In the past three weeks, I’ve had three recruiters contact me about five different positions," Thomas said.

Last Tuesday, just after Labor Day, Thomas began a full-time job as a software-testing engineer in the marketing department at LeftHand Networks. The company has hired 17 people for new jobs since April 1, bringing its head count to 73.

Up and down the Front Range, companies are hiring for new jobs. The positions include engineers, information technology consultants, sales, marketing and customer-service reps, and software developers.

Companies that are hiring range from tiny business software company Newmerix in Superior to data- storage equipment maker McData of Broomfield, information-technology consulting firm CIBER of Greenwood Village, and cable-TV operator Adelphia Communications.

Adelphia, which recently moved its headquarters to Greenwood Village from Pennsylvania, announced in July it was opening a customer- support center in Colorado Springs to provide round-the-clock technical support for its high-speed Internet service. The facility is expected to generate 200 jobs by the end of the year.

"The environment has been steadily improving – versus 2001, when it was steadily getting worse, and 2002, when it was dismal and uncertain where things were going," said venture capitalist Brad Feld, managing director of Mobius Venture Capital in Superior.

Industry executives say the uptick in hiring reflects a number of factors, including fresh venture capital funding, new government contracts, cautious optimism about the economy and spending by businesses on new equipment and services.

"We have a lot more clients willing to part with their funds," said Lesley Taufer, president of Boulder Corp. The Boulder-based information technology consulting firm has brought on seven new employees since April.

Any hiring, however modest, is a change from what followed the burst of the Internet bubble in early 2000, and the slump that broadsided the telecom sector.

The one-two punch delivered a crippling blow to the once high-flying Colorado economy. Local government and industry leaders had touted the state as an important tech hub. Tech workers had flocked here, lured by snow-capped peaks, skiing and hiking.

But according to economist Tucker Hart Adams, Colorado lost some 127,000 jobs from March 2001 to May 2003.

"The anecdotal evidence shows that a majority of those jobs were related to the technology industry," said Adams, US Bank’s Rocky Mountain chief economist.

Said Sue Wyman, president of Greenwood Village-based Jivaro Group, a telecom and high-tech recruitment firm: "It’s going to take some time to regain what we lost."

Any stability, or rebound, in Colorado’s tech-related industries would dovetail with signs elsewhere that a nascent tech recovery may be spreading.

Last Thursday, for example, chip giant Intel raised its third-quarter sales forecast. Also last week, Cisco Systems CEO John Chambers said orders for the company’s computer-networking equipment were "a little bit better" than expected last month.

Here in Colorado, smaller companies in particular are on a roll. ServiceMagic, an upstart Golden company that uses the Internet to hook consumers up with home-improvement contractors and real estate agents, turned a profit in the first quarter and is hiring.

The company was created at the end of 1998. Last month, it moved into bigger digs, expanding into a 22,000-square-foot space from 18,000 square feet.

The company bought new chairs and furniture – and even a soda- pop machine to dispense free soda to employees. Before the move, contractors were busy putting up walls, spreading fresh paint, patching carpeting and installing phone and data lines at the new facilities.

The added space will give ServiceMagic more room to expand its local employee base, currently 160. The company expects to add about 40 employees, mostly here, over the next six to eight months. It has hired 15 people locally since April.

Explaining the need to bolster its sales force and other positions, co-CEO Michael Beaudoin noted that ServiceMagic’s revenue has been growing 100 percent a year over the past two years.

"We want to maintain that growth rate," said Beaudoin.

MicroSat Systems, a builder of tiny satellites in Jefferson County, has been on a roll since landing three contracts over the past year, including two from Uncle Sam. The company, which has brought four employees on board since April, is gearing up to try and land more business."

"We have the potential to win three more contracts between now and the end of the year," said John Roth, MicroSat’s president. "If we win anywhere from one to three of these other opportunities, we’ll be hiring even more."

The company’s head count stands at 38.

Despite such success stories, nobody is predicting a return to the go-go days of the late 1990s, when tech stocks surged and tech companies went on a hiring spree in Colorado and across the nation.

"I’m not sure we’ll ever be off to the races again," said Pat Maley, CEO of Dante Software, a business software provider in Denver that has been hiring partly in response to new business opportunities.

In fact, some industry executives are downright skeptical about the prospects for improvement.

Qwest CEO Richard Notebaert told Wall Street analysts last week the company has had some recent success in landing big business deals, but that it was hard to tell how much was due to a recovering economy and how much was due to taking market share from others.

"We haven’t seen a meaningful change in the economic indicators," he added, saying it was more "bouncing along the bottom indicators."

Notebaert said he’s getting the same view from rival peers, but that "our hope is that all the pundits and media are right and we’ll soon see some pickup."

Moreover, national unemployment numbers released on Friday showed that while the August jobless rate dropped a notch, to 6.1 percent from 6.2 percent in July, nonfarm payroll jobs tumbled 93,000.

The data reinforced the perception among economists and politicians that the nation’s economy is undergoing a "jobless" economic recovery.

And last week, PeopleSoft announced it would be cutting up to 1,000 employees following its purchase of J.D. Edwards. It isn’t clear how the cuts will affect the former J.D. Edwards work force in Denver, which numbers about 2,500.

Still, anecdotal evidence suggests that tech-related companies here are looking to bring people aboard, even if not in great numbers.

Dave Glander has witnessed that firsthand. The Denver resident has been looking for work for the past year after the software company he was working for cut back its operations because of persistent weakness in the telecom business.

Today, recruiters are ringing more frequently with jobs. "All of a sudden, the search firms are calling back and saying, ‘Hey, we’ve got an opening we’d like to present you,’ " Glander said. "It’s almost like the spigot has been turned on a little more to my phone."

That’s in sharp contrast to the past 12 months, when companies were trolling for people to fit into very, very specific positions.

"You had to be able to stand on one leg, to read Chinese upside down . . . and have a Harvard MBA," Glander joked.

"The phone has been ringing more often with legitimate opportunities."

Back at LeftHand Networks in Boulder, Jeff Thomas is glad to have a full-time job again. As a result, he and his wife plan to do some things they haven’t been able to do – like ramp up their Christmas spending.

"It will be a merrier Christmas this year," he said.

[email protected] or 303-892-2467. Staff writer Jeff Smith contributed to this report.

http://www.insidedenver.com/drmn/technology/article/0,1299,DRMN_49_2240931,00.html

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