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As Mars Nears, Telescope Makers See Dollar Signs

The close encounter excites a competitive business dominated by Southland firms.

June 14, 2003|Jerry Hirsch | Times Staff Writer

The lure of the Red Planet pulled amateur astronomer Mark Blodgett into Scope City in Costa Mesa, where he eyed an $800 Konusky-150 telescope in the back of the store.

"If it weren't for the Mars opposition," he said, "I would be waiting to buy this."

Though it sounds like a comment on Martian politics, the Whittier resident was talking about a celestial event this summer when the inexorable orbit of planets will bring Mars and Earth closer together than they have been since the time of the Neanderthals. In the early morning of Aug. 27, Mars will move to within 34.7 million miles of Earth. It won't be that near again until 2287.

The rare astronomical phenomenon -- Mars last came so close to Earth in 57,617 BC -- is eagerly anticipated by telescope manufacturers and retailers.

"Things like this cause people to want to look at the sky, and they need something to do it with," said Maurice Sweiss, president of the Simi Valley-based Scope City chain and a major investor in privately held telescope maker Parks Optical Inc., also in Simi Valley.

The phenomenon called the Mars opposition and other events, such as the periodic appearance of bright comets, are crucial factors in attracting new astronomy hobbyists and sustaining the health of the largely Southern California-based telescope manufacturing industry, Sweiss said.

His six-store chain, which also sells over the Internet, has ordered an extra $3 million in inventory this summer. Torrance-based Celestron International Inc., the nation's second-largest telescope maker, expects the Mars encounter to boost sales by $3 million to $4 million over the summer, the company said.

The region's dominance in the telescope business is directly linked to Southern California's aerospace industry -- the same industry that built the Mars Exploration Rover launched into space Tuesday on a unmanned, locally designed Delta II rocket.

The largest telescope maker, Meade Instruments Inc. of Irvine, was founded by John Diebel, who worked as an engineer at TRW Inc. and Hughes Aircraft Co. before turning his entrepreneurial gaze to outfitting amateur space buffs. One of the co-founders of Celestron also had worked in the aerospace industry.

Today, Meade and Celestron dominate the telescope business, whose annual sales are estimated to be $200 million to $400 million, yet they operate in an increasingly hostile orbit. The companies have slapped one another with patent infringement suits and countersuits as they fight for control of the market.

The Federal Trade Commission has blocked two attempts by Meade to acquire all or a portion of Celestron, including an effort last year when Celestron was put up for sale during the liquidation of its then-parent company, Tasco Holdings.

Eventually, Celestron's management bought the company for $450,000, an admittedly low price because of the uncertainty resulting from its litigation with Meade, Celestron Chief Executive Joseph Lupica said.

Celestron is a distant second to Meade, which controls about 25% of the market and possibly as much as half. It sold $73 million in telescopes and accessories in the year ended Feb. 28 and has about triple the sales volume of Celestron.

Scope City's selection of Meade and Celestron telescopes starts at about $100 for a low-end model. Basic instruments, but ones with bigger optical eyes that provide sharper, more detailed images, start at about $300. Top-flight models with specialized electronics that help hobbyists locate specific stars and galaxies start at about $2,000.

The companies have most of the manufacturing and assembly of their lower-end models done abroad, leaving their Southern California factories to produce the more sophisticated -- and more profitable -- scopes.

Meade's dominance is in large part due to its ability to pair electronics with optics to make viewing the night sky easier.

Its high-end telescopes include a global positioning system receiver that links with a computerized library of up to 145,000 celestial objects, allowing the instrument to automatically locate stars and planets.

Yet despite its technological success, Meade has seen the dollar volume of telescope sales decline by $40 million since 2001, a result of both competition and the declining cost of the computer and electronic technology that is becoming increasingly important in amateur astronomy.

Meade, which also sells binoculars and rifle scopes, is the only public company among the domestic telescope makers. It earned $1.1 million in its latest fiscal year on sales of $110.8 million. Its shares closed Friday at $2.89, down 4 cents, on Nasdaq.

As its telescope sales have dipped, Meade has become more aggressive about defending its corner of the universe.

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