As market stumbles, tech takes a tumble.

• Position: High-Tech

Like the name it shares with the Outer Banks' most famous lighthouse, Hatteras Networks has been a beacon. Last year, like 2001, was treacherous for the tech sector. The Nasdaq was down 30% by late December. Startups foundered because they couldn't raise venture capital or go public. Even established companies saw sales soften.

But Hatteras was a ray of hope. In August, the Durham-based telecommunications-equipment maker announced that it had raised $45 million in venture capital. Even during the boom years of the late '90s, that would have qualified as a lot for a two-year-old company. In 2002, it was a trove.

Hatteras' product, a combination of hardware and software, enables phone companies to offer high-speed data services over their existing networks. Even so, it took the company six months to nail down its money, which should enable it to operate into 2004.

Through the first three quarters of 2002, Tar Heel companies raised $397 million in venture capital, says Jeff Barber, managing partner of PricewaterhouseCoopers' Raleigh office. That was down 27% from the first three quarters of 2001 and a whopping 74% below the same period in 2000.

Even the state's sturdiest tech company, Cary-based SAS, didn't see the sort of gains in 2002 that it had enjoyed during the boom. In 2001, SAS sales grew only 1%. A company spokesman says revenue growth should be greater in 2002.

Since going public in 1999, Raleigh-based software distributor Red Hat has been ballyhooed for its strategy of selling and servicing the Linux computer-operating system, which is available free on the Internet. The company still lost money for the first three quarters of 2002, though by the quarter that ended Aug. 31, its loss had narrowed to $1.95 million, down from $55 million a year earlier. Two other former high-flying Tar Heel software companies were doing even worse. By the end of 2002, Charlotte-based Information Architects had shut down, while Morrisville-based SciQuest was trading for 45 cents a share.

If software companies slumped in 2002, many semiconductor makers managed to eke out gains. Durham-based Cree and Greensboro-based RF Micro Devices made money, though, like many tech companies, they saw their stocks drift downward during much of the year.

Cree, which makes chips out of silicon carbide, announced in July that it had signed its biggest government contract. Worth as much as $26.5 million over three years, it calls for Cree to make chips for military radar...