Seth Lubove, Forbes Magazine, 11.26.01

Zapping anthrax is no problem for SureBeam, but getting rid of human pests is proving a lot tougher. For San Diego's SureBeam Corp., you can't buy publicity like the anthrax hysteria. Thanks to the sicko(s) responsible for mailing anthrax-laced letters, the Post Office awarded the smallish company a $26 million order in late October for eight of its electron-beam irradiation systems to go after anthrax spores and other biological threats.

"The entire SureBeam team is proud to be able to be part of addressing this urgent national priority and in helping to protect against biological terrorism," the company's chief executive, Larry A. Oberkfell, 48, gushed in a press release announcing the deal, SureBeam's splashiest ever. Investors have bid up SureBeam's stock to an Internet bubble-like 21 times expected sales of $35 million, despite the fact that the company had lost money before its partial spinoff from Titan Corp. last March and will likely continue its losses into next year.

But not everyone is celebrating SureBeam's windfall. Behind the headlines, the company is waging a fierce battle with Ralph Nader's Public Citizen, the self-appointed watchdog outfit that has been campaigning for several years against SureBeam's primary business of making machines that zap Escherichia coli, Listeria monocytogenes and other food-borne bugs.

"Basically, the population does not want to eat irradiated food," opines Wenonah Hauter, director of Public Citizen's loftily named Critical Mass Energy & Environment Program. There are two kinds of radiation used on food: SureBeam's high-voltage electrons and gamma rays from cobalt-60, the technique used by some of SureBeam's competitors. Hauter doesn't like either of them.

Nader's raiders have crossed swords with lots of businesses over the years. But the battle with SureBeam and a handful of other irradiation companies stands out for its nastiness and includes accusations back and forth of all manner of misdeeds, including stock manipulation and abuse of tax-exempt status.

"I've worked in public interest for 25 years and gone up against lots of companies, but I have never run into tactics like this before," Hauter says. Forbes recently received a stack of investigative reports on Nader's operatives that was sent anonymously and included personal dirt and tales of supposed ethical conflicts. "I think it's absolutely outrageous that the industry would be gathering personal information on us, especially looking into driving and marriage records," complains Hauter. As for SureBeam's accusation that Public Citizen manipulated its stock by contacting investors and distributing bogus information, Hauter says the charge is "ridiculous."

But Nader's people give as good as they get, reserving much of their contempt for SureBeam, the most visible company in the fledgling irradiation business. Public Citizen has gleefully alerted the Federal Trade Commission about SureBeam's euphemistic reference to its process as "electronic pasteurization," a disputed breach of marketing protocol, since the FTC hasn't formally approved the application of that term to irradiation. In other instances, Public Citizen has organized letter-writing campaigns and protests to harangue SureBeam's customers, including Schwan's and Omaha Steaks.

About one thing Hauter is probably right: Consumers don't relish seeing the word "radiation" on their food. Huisken Meats of Chandler, Minn., one of the first meat processors to use SureBeam's system to zap frozen ground beef, plays down the X-ray treatment on its packaging. It also has to watch out for sabotage, such as the antinuke slogans someone plastered on its packages in Minneapolis stores last summer.

"What they're doing is just wrong," seethes SureBeam's Oberkfell. He has a big beef with a recent quote in the San Diego Union-Tribune attributed to an anti-irradiationist Naderite, Mark Worth, who breezily dismissed E. coli and salmonella as "part of life." Public Citizen's Hauter wrote a letter to the editor distancing the group from the quote, but Oberkfell doesn't buy it: "What he's saying is he doesn't believe in the sanctity of human life."

This isn't the first time that SureBeam and its former parent and still-84% owner, Titan, have lashed out at critics. Titan, a defense contractor, noisily sued San Francisco hedge-fund manager Botti Brown Asset Management last year over allegations that the firm was spreading rumors that Titan was cooking the books and exaggerating SureBeam's sales. The case was settled, with Botti Brown effectively agreeing to a mea culpa that refuted anything negative it may have said.

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November 13, 2001

Surebeam Dn 4%;Off For 2nd Day After Forbes Article

Dow Jones Newswires

By Amy Braunschweiger

Of DOW JONES NEWSWIRES

NEW YORK -- Shares of SureBeam Corp. (SURE) fell for the second consecutive day following the Friday release of a Forbes article discussing SureBeam's battle with Ralph Nader's citizen advocate group, Public Citizen. Shares of SureBeam lost 6.6% of their value Monday followed by a drop of as much as 9.6% Tuesday.

The latest edition of Forbes hit newsstands Nov. 9 even though its dated Nov. 26. The article, titled "Green Beams," highlighted the battle between SureBeam, which irradiates food, and Public Citizen, which sees irradiated food as food exposed to radiation. The fight allegedly heated into a viscous smear campaign between the company and the organization, the article states.

A representative of SureBeam, based in San Diego, wasn't immediately available for comment. SureBeam's method of treating food to prevent contamination by e.coli and listeria has been approved by the Food and Drug Administration.

Shares of the company recently traded at $10.74, down 66 cents, or 5.8%, on volume of 754,600, compared with average volume of 997,512.

A.G. Edwards & Sons analyst Mark Jordan attributes the stock's drop to investors' disappointment that the company hasn't landed more postal security contracts in a shorter period of time.

The same system the company uses to treat food for e.coli can be used to sanitize mail. SureBeam's parent company, Titan Corp. (TTN), announced on Oct. 29 that it received a contract from the U.S. Postal Service for the systems. Under the contract, SureBeam will act as the subcontractor to Titan.

"This stock lifted tremendously on anthrax-related speculation," Jordan said. "And though they have received a contract, it clearly doesn't reflect a very broad roll-out."

SureBeam's stock climbed 75% the week before the contract was announced.

The possibility of receiving more anthrax-related contracts depends on how much funding the postal service will receive from the government to beef up its security.

The U.S. Postal Service has requested $5 billion in aid from the U.S. Congress, $3 to $4 billion of which would go to irradiation systems, Jordan said. "People are waiting to see what the postal service is doing," he added.