Does HNC stand for "Hot New Company"? Many investors seemed to think so, sending its share price skyrocketing from $15 to $90 last year as it announced a series of product breakthroughs. In fact, HNC Software, founded in 1987, is one of San Diego’s earliest high-tech success stories. Today the company has 750 employee worldwide and 335 locally. Its original product line of software solutions for customer management and network security for utility and financial services clients received a big boost as many e-commerce ventures lined up to take advantage of the company’s know-how, raising revenues 20 percent to $215 million last year. The company’s shares are trading at $84.25 and its market cap is $2.1 billion.

CEO John Mutch sees a bright future for HNC. "With the explosion of information on the Internet, we’re seeing an accelerated demand for real-time information analysis. HNC is uniquely poised to benefit with its neural technology and text recognition solutions." Strategic partnerships are extending HNC's capabilities, such as the recently announced alliances with Healtheon/Web MD and Equifax Corp. Its creation of a separate subsidiary, eHNC, cemented its position as one of the most innovative software vendors in e-business.

While imitation is often the greatest form of flattery, for HNC it has also raised the issue of protecting its technology in legal disputes with would-be competitors. In April of last year, HNC's management took strong action to protect its patented technology from unauthorized use. Protection of intellectual property is becoming increasingly important to San Diego’s technology businesses and the success of HNC's efforts may benefit the climate for technology ventures here. HNC also is participating in the Internet Advisory Council, which aims to facilitate e-business with policy recommendations from the business community.

At the core of HNC's technology is a method commonly called expert systems. This uses the results of a series of transactions selected by HNC's software to predict future transactions, such as a customer's decision to renew a service contract or a would-be criminal's attempt to misuse a stolen credit card number. If HNC continues to be successful, the Internet will be a better and safer marketplace for many businesses.

— Max Donner