Sharper focus: once the industry leader, telescope maker Celestron International struggled under distant ownership. Again under local control, it aims to regain share. (Small Business).

LONG accustomed to keeping its focus on the heavens, telescope maker Celestron International has been forced to concentrate on more down-to-earth matters.

After years of struggle under a now-defunct Florida optics company, top management bought out the firm last year and is trying to close the technological and sales gap with its larger rival, Meade Instruments of Irvine.

Celestron has been an established name in the telescope industry for 42 years, ever since electronics engineer Thomas Johnson turned his hobby of making telescopes into a full-time business. He set up shop just off Crenshaw Boulevard in Gardena, not far from its current headquarters in Torrance.

Then and now, this is a precision business. To make a telescope, circular pieces of glass are ground and polished with special solution that acts like sandpaper to increase their clarity and light gathering capability. Then the glass is coated with an aluminum compound, boosting their reflectivity. Polished pieces of glass are then tested to determine their focal points. Even a variation of 0.001 percent in the contour of the glass is enough to cause distortion. At the end of this stage, mirrors and lenses are paired with each other and then taken over to the telescope assembly room, where they are inserted into tubes.

The company helped revolutionize the business in the late 1960s by introducing the first mass-produced Schmidt-Cassegrain telescopes. These combined traditional reflector telescopes, which use mirrors to focus the light from stars, with the quality and portability of refractor telescopes, which use refracting lenses, much like eyeglasses.

"The Schmidt-Cassegrain telescope is the closest thing ever made to an all-purpose telescope, and it's compact and inexpensive to beat," said Dennis di Cicco, senior editor with Sky & Telescope magazine.

The innovation made Celestron a leader in the telescope business for the next 15 years, right up through the surge of interest in backyard astronomy that coincided with the return of Halley's Comet. In 1980, Johnson sold Celestron to Swiss conglomerate Diethelm Ltd., which owned the company until 1998.

Lead slips

Joe Lupica, president and chief executive, now says that the company squandered its early lead in the second major revolution in the industry: computerized telescopes. These machines use a database and an electronic motor to point to any one of thousands of sky objects, including planets, major stars, constellations and galaxies.

With limited investment in research and development under Diethelm in the late 1980s through 1990s, upstart Meade was able to capture the lead in the telescope market, leapfrogging ahead of Celestron. Meade tried to purchase Celestron in 1991, but the Federal Trade Commission rejected the merger on antitrust grounds.

In the mid-1990s, Meade introduced its ETX telescope line, which, starting at $600, brought telescopes within reach of the masses. Previously, telescopes sold for $2,000 or more.

Celestron finally entered the affordable market in 1998 with the first of its "GoTo" line, selling in the $1,000 to $2,000 range. But late to market, it was operating at a disadvantage. Things got worse that year when Diethelm sold the company to Tasco Worldwide Corp., a Florida optics business specializing in low-end sport binoculars.

Tasco was experiencing financial difficulties unrelated to Celestron, that severely limited its ability to invest in the company.

Meanwhile, Meade filed a patent infringement suit in 2001 that forced Celestron to divert dollars away from its core business. Celestron won a round earlier this spring when one of the claims was dismissed by a federal court judge in Los Angeles, and on May 23, the U.S. District Court of the Central District dismissed the remainder of Meade's patent infringement lawsuit. As of last week, there was no word from Meade on whether the. company intended to appeal.

A victory for Celestron would allow it to avoid paying steep royalties to its rival or abandoning the computerized telescope market entirely.

Back on block

Last year, Tasco filed for bankruptcy protection and proceeded under court order to liquidate. Meade tried again to buy Celestron, but was rejected by the FTC. That opened the door for Celestron's three top executives -- Lupica, chairman Alan Hale (no relation to famed early 20th century astronomer George Hale) and chief technology officer Richard Hedrick. The new owners declined to say what they paid for the business, which was backed by a $6 million credit facility from Hilco Capital LP in Chicago.

In the year since the buyout, Lupica, Hale and Hedrick have beefed up sales staff and introduced several new products. The new ownership also has stepped up research and development efforts, focusing on fully computerized telescopes that make use of global positioning system technology. Such GPS telescopes retail for $1,200 to $4,000.

"You mount the telescope, turn on the switch, key in the name of a star and, presto, the telescope automatically points to that star' Hedrick said. "All that's really left for the user to do is center the star in the viewing frame."

The next step is to beat Meade in getting that cost under $1,000. "If we can sell these telescopes for $600 or $700," Lupica said, "we can really open up a whole new mass market."

RELATED ARTICLE: PROFILE

Celestron International Inc.

Year Founded: 1961

Revenues in 2001: $24 million

Revenues in 2002: $20 million

Employees in 2001: 106

Employees in 2002: 92

Goal: To offer broader array of telescopes and binoculars and to develop, manufacture and sell fully computerized telescope for under $1,000.

Driving Force: Growth of amateur astronomy market and the increased demand for fully computerized telescopes.