Telos Takes Control

P> Telos was one of the original federal systems integrators -- founded in 1969, the same year a circuit designer at Intel invented the microprocessor. A predecessor company was C3, which stood for Command, Control and Communications -- an apt appellation given the company's military business base. Throughout the 1980s, the company earned much of its keep building radiation-hardened computers for the battlefield -- a process known as "tempestizing." But the company began to fall on hard times when it spent too much time in the late '80s and early '90s maintaining old government contracts but ignoring new opportunities. As the top and bottom lines fell, the company faced management turmoil, conflicting visions and evaporating focus.

John Wood is the sixth CEO at Telos since 1989. "It's difficult to communicate a vision "with such turnover at the company's top ranks," he said. "There has been great disruption at the shareholder and management level."

Telos is now a privately held company with a minority of stock traded over the counter at NASDAQ and held by institutional investors. The largest private holder of common stock is John Porter of London, and Gotham Partners L.P. of New York, N.Y., is the largest holder of public preferred stock.

Telos has targeted several areas of expertise, including law enforcement and related areas, large-scale network integration, business on global networks such as the Internet, support engineering for complex facilities, and products, including ACE, Netseer, for network security, and Pangaea, a middleware product which tries to integrate data across heterogeneous sources to create a better vehicle for collecting and manipulating data.

Wood wants to focus on the federal government market, but with 90 offices and field sites worldwide, his company also can pursue new markets. Wood estimated that the Department of Justice will disburse an additional $30 billion in block grants to state and local governments to implement provisions in the crime bill. In September 1994, Telos and Electronic Data Systems Corp. of Plano, Texas, won the $108 million personal workstation contract with the Immigration and Naturalization Service, and the INS recently exercised its second-year option with Telos.

Telos announced an alliance in October with leading vendors to pursue business in the criminal justice and law enforcement market. Through this alliance -- The Telos Technology Posse -- the company works with scalable open-systems products from Dell Computer Corp., Austin, Texas; Novell Inc., Provo, Utah; Oracle Corp., Redwood Shores, Calif.; Sun Microsystems Inc., Mountain View, Calif.; and Xerox Corp., Rochester, N.Y.

According to Oracle's Gary O'Shaughnessy, director of business development, "It's good to have a forum [such as the Posse] to share information and talk about opportunities we could work on together. I think you'll see more of these types of forums, especially in law enforcement, where the funds are there at the local level, and upgrading and automation needs are high." O'Shaughnessy said, "The Defense Department and federal world are a little ahead of local law enforcement" in information technology, but local agencies pay special attention to integrators and vendors who have developed solutions to meet law enforcement needs at the national level.

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