Even well-run growth companies with great products can stumble.

That’s a lesson Faro Technologies () learned.

Even as sales grew, problems tripped up the firm: Lawsuits, a corruption probe and rising expenses scared investors.

Now, analysts say, Faro seems back on track. That’s largely due to the ever-growing demand for Faro’s unique products.

The company’s portable devices use lasers to measure in three dimensions. They’re accurate down to a fraction of a millimeter.

The devices are most often used to check products rolling off assembly lines. The idea is to catch errors early and prevent costly re-work. But the products could be useful in construction, forensics and other fields.

The potential market for its products is huge. Faro chief executive and president Jay Freeland pegs the market at $3 billion to $5 billion every year.

Return On Investment

“What we provide is clear return on investment to our customers,” Freeland said in an interview. The Lake Mary, Fla.-based Faro sells products from about $20,000 to more than $100,000 each. Customers typically save enough to see a return on their investment in five or six months, Freeland says.

Factories use them to catch defects much earlier in the manufacturing process. Faro says its devices are easier to use than alternatives like hand measurements or bulkier measurement machines. That makes it possible to check every manufactured item, rather than just checking a sample.

The devices also sync with design software. Every item on an assembly line can be compared with computerized design specifications. That further ensures quality.

Right now, many of Faro’s customers are in the automotive or aerospace businesses. But Freeland says the products are catching on elsewhere. “Every day that goes by, you learn a new application,” he said.

Faro’s goal is to grow sales by 20% to 25% a year. So far that hasn’t been a problem. Sales have grown more than 20% every year since 2001. Faro reported $36 million in sales in 2001 and $152 million by 2006.

Earnings don’t match the stellar sales record. Earnings per share were $1.05 in 2004. But EPS fell to 57 cents in 2005 and 56 cents in 2006.

One reason for the earnings drop: Faro has hired a lot of lawyers lately.

Faro went through what some call the “big three,” all unrelated: Swedish rival Hexagon Metrology sued Faro, saying it had violated its patents. Hexagon’s ROMER Inc. is one of the only firms with a product similar to Faro’s.

Then a group of shareholders sued Faro after earnings, and the stock price fell.

Finally, Faro found that some employees had bribed Chinese officials. That’s illegal under U.S. law. The $552,000 in bribes (on sales of $4.54 million) were reported.

Now, analysts say the legal issues are cooling off. After a long legal battle, Faro and Hexagon settled their dispute March 26. The terms were confidential. Analysts say the shareholder suit is not a significant threat. In the bribery case, Faro is getting credit for reporting it voluntarily and firing offenders. “You’ll see no wavering from our team when it comes to doing the right thing,” Freeland said recently.

Still, the result of all this litigation was millions of dollars in legal fees. That cut into profits.

Also hurting profit was other spending. The firm spent on infrastructure in Asia. It also hired many new salespeople.

Faro feels the need to add sales staff to address its huge market. It’s “one of the biggest drivers of growth right now because the market is so untapped,” Freeland said.

But, selling Faro products isn’t easy. “It’s a sophisticated sale,” said Liam Burke, an analyst at Ferris Baker Watts. New staffers need up to three months of training. Very often, products must be demonstrated in factories for another three months before sales are made. Thus, Burke says, Faro often has a 180-day lag between hiring people and their first sales. Faro incurred a big upfront cost when it hired lots of salespeople at once.

Due to all these higher costs, “Their margins evaporated,” said Richard Eastman, an analyst at Robert W. Baird & Co. Baird seeks banking business from Faro.

Now, Eastman says, Faro seems to be tightening up expenses. Last year, Faro urged each employee to come up with a way to save at least $2,000. The firm saved more than $3 million, Freeland says.

Faro is still hiring sales staff. But it also is focusing on increasing productivity, Burke said. The idea is to get “more sales per employee.”

With its recent cost-cutting, analysts expect Faro to again boost earnings. Thomson Financial says analysts expect earnings per share to nearly double in 2007 to $1.11. Expect earnings of $1.48 in 2008, they say.

Quality Control

Key factors should drive sales, the firm says: Companies are demanding better quality control from their suppliers. Firms want better ways to integrate design software and manufacturing. Other measuring products are slow and cumbersome.

Faro is still at the “cutting edge,” Eastman said. Thus, it’s hard to predict its long-term sales. “The marketplace is still being defined,” he said.

Though many big firms are buying Faro products, they’re not yet standard equipment. “They’re not buying a hundred at a time,” Eastman said. If this ever happens, sales could boom.

Freeland said Faro will “keep educating potential customers (on) what the product can do for them.”

“We’re really sitting at the bottom of the bell curve,” he said.

Faro is also investigating buying up other firms. Freeland says he’s looking for firms with good 3-D technology to add to Faro’s product line.

Jobless Claims Fall to 11-Month Low Weekly Jobless Claims Fall to the Lowest Level in 11 Months The Associated Press

WASHINGTON - The number of newly laid off workers filing claims for unemployment benefits fell last week to the lowest level in 11 months, indicating a solid labor market at the beginning of the year.

The Labor Department reported Thursday that applications for jobless benefits totaled a seasonally adjusted 290,000, down 8,000 from the previous week when claims had fallen below 300,000 for the first time in six months. The back-to-back improvements pushed claims to the lowest level since the week of Feb. 18, 2006.

The latest decline came as a surpise. Claims had been expected to start rising again, given weakness in such key sectors as housing and auto productions.

Economists cautioned that trouble in adjusting the claims figures for normal seasonal variations during holiday periods could be overstating the amount of improvement in the labor market.

AN Edinburgh consultant and his wife have launched a new charity to raise awareness of prostate disease among men following a family tragedy.

Alison McNeill lost both her father and grandfather to prostate cancer, but neither men were told the disease can repeatedly occur among family members. The 40-year-old TV producer from South Queensferry now wants to ensure the same fate does not befall her young son Cameron - who was born just weeks before his grandfather died aged 58 - or thousands of other men across the country.

More than 30,000 men are diagnosed with prostate cancer every year in the UK, and about 10,000 will die of the disease.

At present, there are a number of support groups in Scotland for patients, but Mr and Mrs McNeill said very little is being done to raise awareness of the issue among the general population.

Alan McNeill, who is the consultant urological surgeon at the Western General Hospital, said he has been struck by how few men know about their prostate gland until they develop prostatic disease. He said some of the most tragic stories he hears are those of men with a family history of prostate cancer - including his late father-in-law Hilton McFetridge, who did not know to seek check-ups until it was too late.

Mrs McNeill, who comes from Belfast, said: “Losing my dad nine years ago was a very traumatic time for the family, but the most tragic part is that it perhaps could have been avoided.

“I was just about to give birth to his first grandchild, when he found out his prostate problems were terminal - I was crying between contractions.

“My dad was a typical man, who didn’t cross the GP’s door - he thought many of his symptoms were typical ageing symptoms.

“His father died when he was 69, but my dad didn’t know about familial links, and I wish there had been some sort of information system in place for him.

“My interest now is to protect Cameron - to make him aware of prostate diseases and give him the knowledge to be proactive.”

Incidence rates of prostate cancer are increasing significantly, but awareness is generally low.

The new organisation, Prostate Scotland, aims to run public-awareness campaigns and is raising funds to launch a website.

It aims to generate higher uptake on men’s health checks, expand patient support networks and be at the forefront of lobbying for improved investment into research, care standards and treatment developments.

Mr McNeill said: “We want to provide an information source for men through education and awareness. Through my job, I’ve dealt with cases where it emerged that a patient’s brother or father had prostate cancer, but nobody had put it in their head that they were at increased risk.”

The public launch of the charity will take place on March 16, with a national conference on prostate disease in partnership with The Royal Society of Medicine and The Royal College of Surgeons in Edinburgh. Future fundraising events include a drinks reception, a dinner at Prestonfield House Hotel and a number of supporters will be taking part in the New York Tartan Week ten-kilometre run.

Prostate Scotland is raising money to create a website. Donations can be made by contacting the group at prostatescotland@btinternet.com The facts

Prostate cancer is the second most commonly diagnosed cancer in men in Scotland.

Millions of men in the UK have symptoms that could indicate prostate cancer, including urinating difficulties, difficulty having an erection, painful ejaculation, or frequent pain or stiffness in the lower back, hips, or in the upper thigh areas.

Only men have a prostate gland, which is located just below the bladder. It stores and secretes a clear fluid that constitutes up to one-third of the volume of semen.

Prostate cancer rates have risen 9.5 per cent in the past ten years in Scotland, but a recent poll found that 89 per cent of people did not know the pros-tate’s main function and 66 per cent didn’t know where it was.

Related topic

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