Local (Rapid City, SD) technology firm closes its doors

RAPID CITY — Two years ago, Comuniq USA was hailed
as a shining example of Rapid City’s potential role in a
global, technology-based economy. Today, Comuniq is an
example of how fickle that economy can be.

By Dan Daly, Journal Staff Writer

(Thanks to Randy Hanson for passing this along)

The parking lot at Comuniq’s office on Samco Road in
West Rapid City is empty. Calls to the firm’s local phone
number are being answered by a busy signal. And the
president of Comuniq USA, Bernt "B.A." Askildsen, said he
left the company’s employ two weeks ago. He said the
firm’s Oslo, Norway,-based parent company, Comuniq
ASA, is reorganizing.

But it was unclear Tuesday whether the electronics
research firm had left Rapid City altogether.

In a telephone interview from Norway, Comuniq ASA Chief
Executive Officer Jonas Hahn confirmed that the company
is undergoing reorganization. While that’s going on, the
Rapid City facility is in limbo, he said.

"It’s not closed completely, but we have reduced our
activity to a minimum right now, until we have resolved the
situation. There is a private settlement (with investors)
going on, which hasn’t been completed," he said. "We are
in a situation where we are dependent on new venture
capital. That’s where we stand right now."

He said officials were working on a couple of alternatives
that could lead to a newly formed company as early as
August.

It’s too soon to tell whether a restructured Comuniq would
include a Rapid City research and development office. "It
depends very much on the investment situation. But what
we would like to do is sort of secure a continuity with the
technology and the people we have engaged so far."

Comuniq ASA is an electronics manufacturing and
technology firm. It opened its Rapid City-based U.S.
subsidiary in 1998. The Rapid City office was the parent
firm’s research-and-development center. Engineers and
programmers here have been developing circuit boards and
software for Internet-based telephony and other new
technology, much of it bound for European markets.

In 2000 everyone from Gov. Bill Janklow to the Rapid City
Economic Development Partnership was singing Comuniq’s
praises. The partnership presented its 2000 Magnet Award
to Comuniq for creating local tech jobs.

The company relied on engineering talent from South
Dakota School of Mines & Technology, including many of
the school’s Norwegian graduates. And it grew quickly. By
the fall of 2000, Comuniq had 35 employees working out of
a newly-built office building on Samco Road.

Comuniq’s recent focus had been on a particular type of
technology called Voice Over Internet Protocol. With Voice
Over IP, telephone conversations, voice messages and
other communications can be transmitted over the Internet
rather than long-distance telephone lines. The voice signal
is converted to a digital format, compressed and
transmitted over the Internet. At the other end, the process
is reversed.

However, over the past several months Comuniq had been
cutting staff. Shortly before the local office shut down, only
about 14 people were working there. One former staffer said
Tuesday that Comuniq still owes him about five months of
back pay.

And Comuniq suffered a serious blow recently when it lost
a large development contract. It had been working with
Lucent Technologies to develop a particular type of
computer server for WorldCom Inc.

WorldCom, of course, is in a world of trouble these days.
After its accounting practices came into question, the
telecommunications giant last month had to restate its
earnings for 2001 and the first quarter of 2002 — a $4 billion
hit to the bottom line. The stock price tumbled. And this
week former WorldCom officials were invoking their Fifth
Amendment rights before a congressional committee.

Hahn said WorldCom had planned to invest heavily in Voice
Over IP, and Lucent was in line to develop a lot of the
technology.

"If Lucent had managed to close that deal, I think we would
have a completely different situation. … There are a lot of
dependencies here," Hahn said.

Dick Muldoon, public relations director for Lucent’s
integrated network solutions unit, said he could not confirm
any specifics about contracts with WorldCom. He said
Lucent has indeed done a lot of work on Voice Over IP. He
said WorldCom was a valued customer, but WorldCom is
not material to Lucent’s financial success.

Questions or comments? Contact reporter Dan Daly at
394-8421 or at [email protected].

http://www.rapidcityjournal.com/display/inn_news/news03.txt