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Innovation continues to flourish in San Diego

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Two forces were at work in the first half of 2013 influencing San Diego’s biotech and technology sectors: venture capital and sequestration. While a slow revival in venture capital funding brought jobs growth to the region’s tech and biotech companies, budget cuts implemented by the U.S. government affected federal research funds and contractors working in the defense technology sector. Following are some of the big stories in biotech and technology so far this year.

Biotech, tech attract dollars
First-quarter 2013 venture capital investment in San Diego companies fell compared to the same period last year. However, the 2012 figures got a singularly large bump from Sapphire Energy, which snagged $144 million in funding. Two reports released early this year found an increase in venture capital flowing into local life sciences, medical device, software and other information technology companies in 2012. This year is expected to remain on par with 2012.

Budget cuts and layoffs
Automatic sequestration cuts that kicked in March 1 will take a $85 billion bite out of government spending through Oct. 1. Defense contractors, including those in the technology sector, stand to feel the brunt of the sequestration.

Space and Naval Warfare Systems Command (SPAWAR) has a hiring freeze in effect due to sequestration budget tightening. SPAWAR develops, buys, installs and sustains communication, computer and networked systems onboard Naval submarines, ships, aircraft and shore stations, and employs about 5,000 people in San Diego. The hiring freeze remains in effect until further notice, and only those positions determined to be absolutely mission-essential can be filled.

Sony Electronics Inc. also eliminated jobs in San Diego, for the second time in 12 months. It announced 130 employees would be laid off at Sony Electronics’ main office in Rancho Bernardo in April. The move is part of the Tokyo-based manufacturer’s continued plans to reduce operating costs for Sony Electronics, a division of Sony Corp. of America (NYSE: SNE). Sony’s last large local layoff came in March 2012, affecting 80 employees. Sony had as many as 4,500 employees at the site in 1998, but those numbers have steadily declined. Today there are just over 2,000 employees remaining at the campus.

Mergers & acquisitions
In a deal valued at close to $1 billion, San Diego’s Websense Inc. (Nasdaq: WBSN), a leader in warding off cyber attacks and data theft, has agreed to be sold to Vista Equity Partners, a private equity firm that invests in software, data and other tech businesses. Once the deal closes, Websense will become a privately held company. Websense senior management is expected to continue with the company, and its headquarters are expected to remain in San Diego.

San Diego-based technology company Cymer Inc. (Nasdaq: CYMI) recently completed the previously announced merger with Netherlands-based ASML Holding N.V. along with certain ASML affiliates. Cymer is an industry leader in developing lithography light sources, used by chipmakers worldwide to pattern advanced semiconductor chips. Each share of Cymer common stock outstanding immediately prior to the completion of the merger was converted into $20 in cash plus 1.1502 ASML ordinary shares. ASML’s share capital will increase by approximately 36.5 million shares as a result of the merger.

San Diego’s resident device cover maker LifeProof will be gobbled up by OtterBox, one of its biggest competitors. The family-owned LifeProof, which will retain its name, pulled in $575 million in sales last year and was named the No. 10 most promising company in America, according to Forbes. The purchase price has not been disclosed.

SGN (Social Gaming Network) recently purchased Carlsbad-based Mob Science. An independent developer founded in 2008, Mob Science has an 11-person staff that will stay in its Carlsbad offices. The deal is structured as a cash and equity purchase. SGN deploys games across iOS, Google Play, Facebook and Amazon, allowing players to interact with friends regardless of device or site.

-Compiled by Jennifer Chung Klam.

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