Poised for a breakout Featured

9:03am EDT December 20, 2002
Poised for a breakout

Forest City Enterprises Inc.
For more than 80 years, Forest City Enterprises Inc. has owned, developed and managed real estate property across the nation. But even with all its previous success, the Cleveland-based firm stepped up its efforts over the past two years and views 2003 as a critical year.

Under the direction of Albert Ratner and Sam Miller, co-chairmen, Forest City recently proposed an ambitious project in the vacant Higbee Building, where it has suggested Cuyahoga County could consolidate many of its administrative offices.

Outside of Cleveland, the firm's affiliate, Forest City Ratner Cos., has been developing property in New York City. In October, it completed construction of 12 MetroTech Center, a 1-million-square foot courthouse that is the largest in the state of New York and the first new building in New York since Sept. 11, 2001.

Forest City also put the finishing touches on the 19-story, 670,000-square-foot Nine MetroTech building, which represents the last phase of the company's MetroTech Center Brooklyn office complex.

And in August, Forest City opened two office buildings at its University Park at MIT project, an office and biomedical park in Cambridge, Mass., that is a joint effort between Forest City and the Massachusetts Institute of Technology.

Cleveland Medical Devices Inc.
Since founding Cleveland Medical Devices Inc. in 1990 to develop, manufacture and market patient rehabilitation and monitoring products, president Robert Schmidt has grown the company from one employee to more than 22 and secured $8 million for research and development from the federal government.

During the past 18 months, Schmidt's company has been on the fast track to growth. In February 2002, Cleveland Medical Devices received FDA clearance for a programmable wireless monitor that tracks electrical impulses in the brain, heart and muscles. The device, called the Crystal Monitor, is the size of a deck of cards and designed to be used in emergency rooms, ICUs and primary care offices, where floor space is at a premium.

Schmidt expects this to open the door to several medical niches, where the company's products can not only save health care facilities money but also increase efficiency.

Cleveland Medical Devices is also working closely with the federal government. Last October, it was awarded five military contracts for other monitoring devices such as an advanced subminiature telemetry system, which will provide radio test data from aircraft and missiles to the ground, and a wireless harsh environment medical monitoring base station, which will be used to monitor soldiers in field hospitals.

Flashline
Reusable software has become big business for Flashline, which last year raised $11 million in venture capital during a difficult economic period for technology firms.

The company, started by Charles Stack after he sold the first Internet bookstore, Book Stacks Unlimited, is on a growing binge, adding staff, space, advisers, partners and clients. Flashline now appears to be on the verge of a breakout.

Among the new partners that will offer implementation, customization, consulting and training services on Flashline's reusable software components are Andrews Technology, Codesic Consulting, Momentum Software, Noblestar, Number Six Software, nVISIA and Orbeon. Stack has also forged technology relationships with providers of development tools and platforms, including AltoWeb, Borland, IBM, Rational Software and TogetherSoft.

The moves, Stack says, will expand his firm's reach to new customers.

In December, Alltel Information Services, a subsidiary of $7.6 billion-a-year phone company Alltel Corp. that sells and hosts software to process mortgages, deployed Flashline's software-asset management tool to more than 1,200 of its developers. The tool is a central repository of information on tested software components that can be reused in new applications. It was cited by Alltel officials as part of the company's strategy to speed the rollout of new capabilities for its mortgage system to loan officers at customers that include Bank One, Washington Mutual and Wells Fargo.

Riverside Cos.
Since its inception in 1988, this buyout firm has quietly gained a reputation for making smart purchases that complement its existing holdings.

Riverside has acquired 64 companies since its inception -- 31 platform (main business) and 33 add-ons (complementary companies.) In 2002, it made 12 acquisitions in a tough economy.

Part of the reason Riverside was able to accomplish this is its ability to invest in premier companies at the smaller end of the middle market, focusing on industry-leading companies valued at $10 million to $100 million. Among its holdings are Conferon and automotive parts catalog company J.C. Whitney & Co.

Riverside is worth watching because it developed criteria that have been the foundation for its investment decisions and that help ensure its acquisitions have the best chance of paying off. Among the criteria measured are significant and defensible share of a market; operating profit margins exceeding 10 percent; excellent management in place of identified; diversified customer base without undue concentration; record of sustainable profits and cash flow; stable products not subject to rapid obsolescence; operating profit of at least $3 million; and in operation for at least five years

Noteworthy Medical Systems
The issues that surround creating and implementing software programs for electronic medical records (EMR) are complex. There are patient privacy issues, new health care legislation, costs and the problem of integrating technology into what is traditionally a paper process.

But those who watch the health care industry say it is inevitable that even the process of medical recordkeeping -- slow to make the move to technology -- will go digital.

That's why Larry Dolin (not the local baseball team owner) and Joseph Gorman (yes, the former CEO of TRW) are betting on Noteworthy Medical Systems. Dolin is founder and president, and Gorman recently joined the board of directors.

Noteworthy expects that in response to new Health Insurance Portability and Accountability Act (HIPAA) regulations, 60 percent of large and community health care systems will attempt to integrate EMRs within the next year.

Besides the Gorman coup, Noteworthy has made other strategic moves that make the company one to watch. In the fall of 2001, it acquired National Trauma Center, a provider of medical handheld patient tracking tools with 30,000 users. And in late 2002, Noteworthy signed an agreement that stated 3M Health Information Systems will provide its Data Dictionary and Clinical Data Repository for use in its EMR product.

The market seems to be there, and Noteworthy is a front-runner, but only time will tell how long it will take hospitals and physicians to give up those familiar manila folders.