Utah's tech industry saw another of its once fast-rising shooting stars pulled into orbit as Cupertino, California-based Symantec announced last week that it is acquiring PowerQuest.
Although terms of the deal were not included within the company news release, it is widely reported that software security firm Symantec will pay roughly $150 million out of its $1.9 billion cash hoard for the Orem-based PowerQuest.
Founded in the early 1990s by serial entrepreneur Eric Ruff, PowerQuest began as a provider of utility software for individual users and standalone personal computers, most notably its application known as PartitionMagic. (Disclosure: Ruff's earlier company, Gazelle Software, was a client in 1990 and 1991.)
Over the years, PartitionMagic won numerous industry awards and recognition as a result of its market acceptance and success.
At the same time, Ruff used an outspoken style and his own form of flamboyancy to drive both the company and him into the limelight. And it worked.
PowerQuest was recognized in 1998 by the MountainWest Venture Group as the fastest growing company in the state in that year's Utah100 list, having grown a mind-numbing 86,909 percent during the previous five-year period.
Given that the baseline for consideration in the Utah100 was a minimum of $25,000 in revenues for the first year of a five-year cycle, PowerQuest finished 1997 with revenues of north of $21 million.
Over the years, PowerQuest raised a publicly disclosed $13.5 million from venture capitalists, strategic investors and accredited individual investors before it stopped disclosing such stuff after 1999.
By my estimations then, I suspect PowerQuest ended up raising around $20 million during its 10-year lifetime.
Not all was rosy for the firm or its founder, however, as the rise of networked computing systems and the Internet meant that standalone computing was becoming a thing of the past.
So although PowerQuest's revenues were rumored to have reached $45 million by 1999, there were storm clouds on the horizon.
Hence, new management was brought in to run the company, Ruff was moved first to an advisory role, then the board of directors, and finally to a "mere" shareholder in his creation.
At the same time, PowerQuest began a laborious course correction to move its technology offerings away from software applications targeting standalone PCs and focused on networked enterprises, particularly small- to mid-sized companies.
The pending acquisition of PowerQuest by Symantec (subject to the typical review by the Federal Trade Commission and shareholder approvals) suggests that the transformation of PowerQuest has been completed and was successful.
Smart business executives don't tend to throw around $150 million just for the heck of it.
With sources projecting 2003 revenues for PowerQuest in the $55 million to $65 million range, the price tag is in line with other recent software company acquisitions of roughly 2.5 times annual revenues.
For its part, Symantec claims that it intends to keep the PowerQuest operations here in Utah, which minus any obvious operational redundancies, is good from an employment standpoint.
However, given the way such financings are structured, the bulk of the $150 million will end up in the pockets of the various VCs and investors behind PowerQuest and not the founders of the firm.
So once again another one-time high-flier of Utah's technology universe is pulled into orbit outside of Utah, being subsumed by another larger entity.
And to change metaphors for a moment, it's also highly likely that last week's acquisition announcement will do anything to change the perception that Utah's technology industry is little more than a high-tech farm system for the technological big leagues outside of the state.
David Politis leads Politis Communications, a public relations, investor relations and marketing communications agency serving the high-tech and biotech markets.
E-mail: dpolitis@politis.com.