When federal defense spending declined 40 percent in the 1990s, many San Diego defense contractors experienced pain. Titan Corp., a defense firm founded in 1981, experienced instead a transformation — into a high-tech high flyer in the booming mobile communications arena.

Government contracts still account for three-quarters of Titan's $400 million annual revenue, but it is now beginning to reap the benefits of major multi-year contracts from its communications R&D programs. Earlier this year Titan announced an agreement with STA of Paris to provide France Telecom with systems for broadband Internet connections into the home using satellite transmission. Titan CEO Gene Ray observes optimistically, "the agreement with STA is another example of Titan leveraging years of government funded research and development and our advanced technological capability to serve large commercial market opportunities."

Titan was one of the first companies to set up an in-house incubator to fund start-ups which commercialized promising R&D projects. It scored two spectacular successes. Wave Systems, which provides specialized electronic product distribution and metering systems for Internet access devices, debuted on the Nasdaq last June with a market capitalization of $800 million. IPivot, whose technology optimizes capacity utilization of Internet networks, was sold to Intel last year for $500 million. The company’s Surebeam technology will soon be used to pasteurize product from 75 percent of the U.S. ground beef industry and 50 percent of the chicken industry.

Wall Street has applauded Titan's transformation. Its share price stagnated below $10 during the bull market of the 1990s but skyrocketed in 1999, becoming the best performer on the New York Stock Exchange with a one-year increase of 760 percent. Shares were trading at $39.13 on Feb. 22, putting its market cap at $1.8 billion. Occurring the same year as Qualcomm's record performance on the NASDAQ, this qualified San Diego for the "Guinness Book of Records" as the only city with top performers on two national stock exchanges.

Titan Founder Ray also is headed for the record books as his tenure as president and CEO approaches 20 years, an encouraging achievement for the new generation of start-ups. Titan has rounded out its senior management team by recruiting executives with extensive experience complementary to its traditional defense-related businesses and now employs a staff of 3,000. That success has created new openings for an additional 250 employees, another sign that Titan is on the fast track.

— Max Donner