The Rakon files: Two sides of the same coin

On August 24, Rakon Ltd put out a media release denying a news report published that day linking the company's products to smart bombs. Here is what the Rakon release said, and what Rakon's internal documents reveal:

What Rakon said in August:

1. Headlines that Rakon was supplying technology for missile systems [smart bombs] to the US were "incorrect and misleading".

2. Rakon was not privy to "end-use systems, equipment or applications developed by its customers".

3. Rakon has not developed any technology specifically for the US military or for use in smart bombs or missiles.

4. Military or aerospace customers accounted for around one per cent of Rakon's manufacturing output .

(Source: Rakon press release)

Rakon company documents obtained by the Herald reveal

1. The company is a willing partner in the supply of components for smart weapons' navigation systems and has developed product specifically for such use. It began contributing products for the JDAM (Joint Defence Attack Munition) programme after Rockwell was awarded the JDAM contract in late 1995.

2. Products being developed during the past year include a "radiation-hardened" miniature temperature sensing crystal oscillator (MTSXO) for the United States' nuclear defence capability.

3. A document authored and approved by Brent Robinson, three months before the above media release, states: "Rakon's military products include: Mainstream TCXOs for inclusion in smart bombs (JDAM, Navstrike) ... New products include G-hardened crystals for use in smart shells ... Rakon has received hundreds of thousands of dollars in development funding from Rockwell for ... cost reduction of the CDXO, and developments of a high G-shock crystal ... Ninety per cent of all [Rakon] crystals and oscillators are customised to the specific customer application. Rakon's 3 to 5 year vision [is to] dominate the lucrative and expanding guided munitions and military positioning market ... "

4. Military and aerospace customers make up 21 per cent of Rakon sales by market.

(Sources: Rakon company profile, 2005; Rakon business plan for year 2006; Rakon emails)

THE FIRM

* Manufacture of high-end quartz crystals and oscillators for GPS applications.

* 21 per cent of sales revenue from military and aerospace sector.

* Second-biggest client by value as at 2005 was Rockwell Collins, major supplier of navigation systems including for smart bombs to US military.

* Developed miniaturised crystal oscillators for use in military products, cell phones and motor vehicle navigation systems.

* Developing "radiation-hardened" crystal oscillator for US' nuclear defence programme.

* Developing high-G shock crystal oscillator for "smart shells".

KEY DATES

1967: Founded by engineer Warren Robinson in basement of family home.

1990: Breakthrough enables production of crystal oscillators unmatched in miniaturisation and frequency stability.

1991: Becomes "significant supplier" to Rockwell "including military GPS contracts".

1996: Rakon products enter the JDAM smart bomb development programme after Rockwell wins contract.

1997: First JDAM guided missile kits delivered to US military

1998: Rakon commended by US Air Force for outstanding delivery performance during critical times (Balkans war).

1999: JDAM smart bombs dropped over Kosovo, first time used in warfare.

2002: 3,000 JDAMs estimated dropped per month month during Afghanistan conflict.*

2003: 6,500 JDAMs dropped in Iraq.*

2005: Joint-venture with Rockwell to develop "radiation-hardened" crystal oscillator for US nuclear defence programme. Begins development of a crystal oscillator for "smart shells".

2005: Wins NZ Trade and Enterprise Supreme Exporter of the Year Award; consortium headed by Navman founder Peter Maire buy 20 per cent stake.

2006, May: $66 million public share offer oversubscribed, lists on Stock Exchange at 47 per cent premium to offer price.

* Sources: Jane's Defence Weekly, Defence Update: International Online Defence Magazine

GOVERNMENT GRANTS

* $59,412

New Zealand Trade and Enterprise in 2004, for new initiatives aimed at developing its United States and European markets.

* $351,000

Technology New Zealand (TechNZ), technology for business growth grant in 2003-2004.

* $183,000

TechNZ in 1996

* Rakon says no Government grants are used for military products.

$135M BOOST FOR RAKON FOUNDER

It's been a long haul for Warren Robinson who mostly funded Rakon himself.

But his four-decade odyssey has paid off handsomely - the company's stock exchange launch this month made him one of the country's richest men.

He is likely to find himself alongside jeweller Michael Hill in this year's NBR Rich List with a fortune of at least $135m.

In the past six months, he has received $80m from share sales and repayment of a loan he made to his company.

He retains 22.6 per cent of Rakon through his family trust, worth $59m.

With each of his sons, fellow board members Brent and Darren, holding 9.3 per cent stakes (each worth $24m), the Robinson family remains in control of Rakon.

Rakon's $66m public launch gave the company a market capitalisation of $262m and has raised $10m for use on expansion and reserach and development.

RAKON'S BOARD OF DIRECTORS

* Bryan Mogridge, chairman, independent, appointed November; degree in bio-chemistry, senior management background in medical and wine industries, directorships include Mainfreight Ltd and Pyne Gould Corporation Ltd.

* Bruce Irvine, independent, appointed November; commerce and law degrees, managing partner of Deloitte's Christchurch office, directorships include Pyne Gould Corp. and Marac Ltd.

* Peter Maire, co-founder and former president of navigation technology company Navman New Zealand Ltd, appointed October;

* Brent Robinson, executive director; appointed managing director in 1986, electronics engineer with 25 years experience in design and manufacture of crystals and oscillators.

* Darren Robinson, executive director; sales and marketing background, appointed director of sales and marketing in 1990.

* Warren Robinson, non-executive director, founded company in 1967, chairman until November 2005, electronics engineer.