Veeco rebounds, local unit profitable

FORT COLLINS — Veeco Instruments, seemingly on shaky ground in Fort Collins since 2001, appears to have found stability in recent months.
The company?s Fort Collins unit has experienced 25 percent sales growth over the past 12 months and has been recently hiring employees ? turning a tide that once forced Veeco to cut back from 250 workers to 35 over a two-year span.
According to Veeco (Nasdaq: VECO), the company has found expanding markets for its ion beam deposition systems, which are developed in Fort Collins.
Once reliant on the telecommunications industry, Veeco?s ion beam deposition systems are now in demand for the increasing production of optical devices. Sales of electronic goods that require optical coatings ? like personal computers, cell phones and digital displays in automobiles ? have fostered resurgence at the Fort Collins operation.
Basically, the coatings on optical devices limit glare and allow users to read the devices more easily.
Another source of sales is the improving data storage market, said Matt Petkun, an analyst who follows Veeco for the investment banking firm D.A. Davidson.
?This place was losing a lot of money after telecom crashed ? now we?re very profitable,? said Mathew Abenne, vice president and general manager of Veeco Fort Collins.
The newfound stability was reflected in a recent real estate deal, in which Veeco executed a sale-lease back agreement for its building at 2330 E. Prospect Road.
As recently as last fall the Veeco building was up for sale, an indication that Veeco?s future in Northern Colorado was uncertain. Much of the 47,643-square-foot building had been vacant after Veeco transferred the manufacturing of ion beam systems to its New York headquarters.
Instead, Veeco has agreed to sell the property for $2.95 million to Fort Collins investors and signed a 10-year lease to occupy roughly 75 percent of the building.
The investors include Rick Callan, a partner in Everitt Commercial Partners, a local commercial real estate brokerage and consulting firm.
Early in the sale process, Veeco was interested in finding a buyer that would let the company lease back 15,000 to 20,000 square feet, Callan said.
As business turned for Veeco, and demands for research-and-development space increased, so did Veeco?s lease requirements.
?They realized they needed more space (in Fort Collins) than they originally anticipated,? Callan said. ?That was great news, so we helped put the deal together.?
Callan expects to remodel the remaining 13,000 square feet that will not be used by Veeco.
?We?ll go in and demise the space and market it to a flex user,? he said, referring to a business that needs both office and light industrial space.

Veeco?s ties to Fort Collins
Veeco Instruments traces its roots in Fort Collins to 1974, when Paul Reader and Harold Kaufman founded Ion Tech Inc.
Reader and Kaufman, two former NASA physicists, developed a technology that eventually was key to the ion beam deposition system. Ion Tech began to take off in the 1990s, as the company?s technology became attractive for manufacturing fiber optic filters ? devices that expanded bandwidth in fibers.
Specifically, the ion beam instruments use charged particles to deposit thin films on microelectronics products.
When demand for telecommunications took off in the late 1990s ? aided by the dot-com explosion ? New York-based Veeco Instruments saw the value of Ion Tech?s product and bought the Fort Collins company for $37 million.
When Veeco bought Ion Tech, the local operation employed about 50. That number soared to 250 by early 2001.
Veeco also quickly doubled the size of the Fort Collins operation in 2000 to allow for more manufacturing capacity. That?s when the telecommunications market fell flat.
Since then, Veeco moved the ion beam manufacturing to New York and scaled the Fort Collins operation back to focus on engineering and R&D.
Veeco slashed its local payroll to 35 by early last year.
?We refocused the business,? Abenne said. ?
Currently, the company declines to release its staff size in Fort Collins, nor will it disclose its number of new hires this year.
But Veeco officials said the sale-lease deal shows its commitment to Northern Colorado.
?This is Veeco?s ion source center of excellence,? Abenne said. ?We do work on a lot of ion beam technology that?s internal to Veeco as well as external ? In the past, all of our products were sold outside of Veeco. Today, it?s mixed.?