Sarnoff Corporation - Corporate History

Corporate History

Although the facility existed under the name David Sarnoff Research Center for many years, Sarnoff Corporation was only created as an independently operating business following the purchase by General Electric (GE) of RCA in the late 1980s. The context was RCA's write-off of $100M's of investment in capacitive-pickup videodisc technology. RCA's SelectaVision offering was overtaken by the videocassette recorder, which allowed recording in addition to playback offered by Selectavision disks. This 1983 product failure affected RCA stock at a time when equities markets were advancing strongly, thus paving the way for a GE takeover.

In the deal, in which GE gained ownership of NBC, RCA was broken up. GE's Jack Welch disposed of diverse RCA operating businesses. Lockheed Martin acquired RCA's government systems unit in the Philadelphia area. Harris Corporation acquired RCA's semiconductor division, located along Route 202 in New Jersey. Thomson SA, the French company, acquired RCA's consumer electronics division with manufacturing activities in Indianapolis, IN and Lancaster, PA. Regarding the RCA David Sarnoff Research Center, GE did not require an augmentation of GE labs in Schenectady, and Syracuse, NY. In the regional community, interest was expressed in establishing an east-coast "Silicon Valley", in which the Princeton, NJ David Sarnoff Research Center could play a role.

A late-1950s antitrust consent decree had required RCA to provide low-cost licenses for consumer electronics technology, largely television-related, to domestic U.S. competitors. RCA had, however, monetized its intellectual property by selling additional licenses internationally. The David Sarnoff Research Center had continued to provide support to clients to further the inventions described in these patents, and GE wished to maintain these activities of the David Sarnoff Research Center to service the very considerable sizable licensing activity that it acquired along with RCA.

To address this need, GE engaged non-profit SRI International as an independent third party. Ultimately, in 1986, GE accepted an SRI International proposal that it acquire the David Sarnoff Research Center by donation, along with sufficient operating funds to maintain the activity for several years. In fact, the patent licensing revenues associated with RCA television technologies significantly exceeded operating costs. GE retained the excess and the David Sarnoff Research Center continue to support the licenses and ensured they maintained their value. A provision of the divestiture was that, should the organization not be profitable five years after it was emancipated from GE, its land (nearly 300 acres (1.2 km2) of valuable property) would revert to GE. Sarnoff was able to attain profitability and the deed was transferred to Sarnoff Corporation around 1995.

A sizable part of the workforce was reduced by a layoff during the Dot Com Bust reduced the amount of venture capital available; the company had 800 employees in 2001, and 540 in 2006. At the beginning of 2011, Sarnoff Corporation merged with SRI, ceasing to exist as an independent company.