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In this Issue: > General Interest > Company News > Merger & Acquisition Activity > Primary Sources |
> GENERAL INTEREST
A couple of months ago the Bank of Canada suggested the recession was technically over. A new OECD report suggests Canada is lagging other major economies in pulling out of the recession, but the global slump is coming to a quick end. Many economists here disagree with the OECD report, suggesting Canada is indeed already in recovery.
The Monster Worldwide employment index rose seven points in August from July to a reading of 121, posting its highest monthly rate of improvement in four years. Monster’s index is based on a review of online job ads taken from a selection of corporate career Web sites, including Monster.
US consumer confidence fell in September, according to the US Conference Board’s consumer confidence index which fell to a level of 53.1 in September (1985=100) from 54.5 in August. Consumers claiming business conditions are “bad” rose to 46.3% in September from 44.6% in August. Those claiming jobs are “hard to get” increased to 47.0% from 44.3%.
> COMPANY NEWS
It has been more than a year since HP acquired EDS, and HP has now announced it would leave the EDS brand behind and rename its IT services provider business HP Enterprise Services.
In 2004 Computer Associates embarked on a plan to recover from an accounting scandal that sent its CEO, Sanjay Kumar to jail. It was John Swainson who would be the CEO who would lead CA through that recovery. This month Swainson announced his retirement.
Dell will pay US$4 million to settle charges of fraudulent and deceptive business practices brought against the company by New York’s Office of the Attorney General. The New York attorney general filed suit against Dell in 2007, charging that the company misled customers by charging high credit rates when they were promised cheap financing.
> MERGER & ACQUISITION ACTIVITY
Avaya paid $915 million for Nortel Enterprise Solutions, which includes $15 million reserved for an employee retention program. Also part of this deal is sale of such assets as Nortel Government Solutions and DiamondWare to Avaya. Nortel Enterprise Solutions president Joel Hackney said: “This is fantastic news for our customers, as this will empower us to continue to deliver industry-leading solutions and services focused on unlocking the enterprise business potential enabled by unified communications. It provides the capability to chart our future with laser-focus, enabling customers to compete in new ways with greater scale and resources. We look forward to working closely with our customers, partners and stakeholders during this pre-close phase to ensure that we continue to innovate to meet customers’ needs with high-performance, efficient and secure communications solutions.” Kevin Kennedy, the president and CEO of Avaya, based in Basking Ridge, N.J., said: “Our successful bid brings us closer to adding Nortel and its complementary channel, portfolio, research and development, and global presence to Avaya. “We believe the acquisition brings inherent value to both organizations’ customers, employees and partners, and we look forward to its successful conclusion,” Kennedy said. Hackney went on to say that as Nortel works through integration planning, it is business as usual, and the Ottawa-based company will continue to focus on supporting the installed base through to when the deal closes and beyond. Industry Canada has since announced that it will only allow Avaya to buy Nortel’s enterprise business if Avaya can prove the US$915 million deal is beneficial to Canadians. More to come I guess!
Intuit paid $170 million for online personal finance rival Mint. Intuit has long dominated the world of personal finance software with Quicken in all of its flavors. Microsoft Money was its primary competitor, but Microsoft bailed out of the personal finance software market earlier this year. Intuit has been the largest player in retail personal finance software pretty much since the inception of personal finance software. By purchasing Mint, Intuit acquires a successful Web-based personal finance service to help catapult its online efforts. It doesn’t hurt that the purchase also eliminates its biggest competitor at the same time. Ultimately, this is a great deal for Intuit, and it will probably yield benefits for Quicken users with more innovative online services and features. Mint users will have to hold their breath and keep their fingers crossed to see what becomes of the free service they love so much.
Xerox has agreed to buy business process outsourcer Affiliated Computer Services (ACS) for US$6.4 billion, in a move it hopes will allow it to expand beyond the field of document management. The deal will triple Xerox’s revenue from services, from US$3.5 billion a year to US$10 billion a year. Around the world, ACS’s 74,000 employees work in finance, human resources, IT support, and customer care. For the year to June 30, ACS reported revenue of $6.52 billion, about 40% from government customers, making ACS one of the largest providers of managed services to U.S. government bodies. Xerox’s 54,000 staff work on document management technologies and services, as well as on the company’s historic photocopier business. The company reported 2008 fiscal year revenues of $17.61 billion, of which 26.6% came from equipment sales.
Dell announcing a $3.9 billion acquisition of IT services firm Perot Systems Corp. While both companies stressed the complementary nature of the deal, the move is primarily an effort for Dell to boost its IT services portfolio and give it a new dimension beyond its hardware selling business. Michael Dell said “It will also enable Dell to extend the reach of Perot Systems capabilities, including in the most dynamic customer segments around the world,”, referring to Perot’s strong footprint in the health and government industries. After the acquisition is officially completed later this year, Perot Systems will become Dell’s services unit and will be led by current Perot Systems CEO Peter Altabef. The move represents Dell’s first big step toward transforming its business towards an IT services focus – a shift the company has been talking about a great deal in recent months. The fact that Dell and Perot Systems – founded by former U.S. presidential candidate Ross Perot – have collaborated on a variety of government and health care projects in the past made the acquisition an obvious one, according to Dell’s CEO. “This will elevate our combined enterprise and services business to $16 billion, with services revenue of $8 billion over the past four quarters,” Dell added. Ross Perot Jr., chairman at Perot Systems, said that 27% of its revenue comes from government services. “It’s an area that we’ve focused on intently over the past eight years and have really built up,” he said, adding that the combined Dell-Perot team will also bring tremendous strength and scale to the health care industry. And this includes Canada, as recently Perot Systems’ MEDITECH Solutions Group said it was expanding its resources, including its team of application specialists, to better address technology, integration and standards challenges in the Canadian health-care community. The MEDITECH initiative, which aims to combine technology and application expertise in one package to healthcare customers, is almost certain to move forward with Dell’s high interest in this space.
Adobe is paying $1.8 Billion for Web analytics company Omniture. The price San Jose, California-based Adobe is paying for the company, which is $21.50 per share, is at a 45 per cent premium over Omniture’s average closing price for the last 30 trading days, Adobe said. Adobe, known for multimedia design, Web-development and document-creation software such as Flash, Dreamweaver and Acrobat, said the purchase will help the company add Web analytics and optimization capabilities directly to those products. This kind of ability to measure what kinds of media, Web applications or Web pages are popular with users is becoming essential as more and more business is being done on the Web, particularly in the area of online advertising. For designers, developers and online marketers using its tools, this new capability will help them streamline how they create and deliver relevant content and applications, Adobe said. Advertisers, advertising agencies, publishers and online retailers can improve the experience of their end users and get more out of their digital media through the new analytical capability. Following the close of the deal, Omniture will become a new unit within Adobe, the company said. Omniture’s CEO James will join Adobe as senior vice president in charge of that business unit, reporting to Adobe President and CEO Shantanu Narayen.
EMC is buying Kazeon Systems, a company that develops products for collecting and analyzing electronic information for legal discovery. Kazeon sells an appliance used by law firms and corporate legal departments to identify and process electronic data from laptops, desktops, content management systems and e-mail archives as well as software such as Microsoft’s Sharepoint and Lotus Domino. The technology complies with the Electronic Discovery Reference Model used by legal entities and IT staff. Kazeon’s technology will become part of EMC’s SourceOne family of products for eDiscovery, archiving and compliance. Users of the product can do early assessments to help determine the merits of a case. They can also use it to classify information and then take action such as deleting documents or migrating them to storage systems.
Adobe has acquired Business Catalyst, which provides a platform for Web professionals to build online businesses, and its GoodBarry subsidiary. Business Catalyst offers an all-in-one Web site platform for Web professionals to build online businesses for clients at a fraction of the time and cost, without requiring any programming. GoodBarry features an integrated system for running Web sites and offers e-mail marketing and has been around since 2004. The current Business Catalyst team is expected to remain largely intact at Adobe, Business Catalyst said. The company also expressed a continued commitment to partners and customers. Adobe did not provide information on the cost of the acquisition.
EMC has acquired FastScale Technology, a vendor of software for data centers, in an effort to focus on supporting private cloud infrastructures. The acquisition of FastScale extends EMC’s Ionix product packages for automating IT management across storage, computing, network and virtualization resources. The companies did not disclose the terms of the deal for the privately held vendor based in Santa Clara, California. FastScale’s technology is focused on simplifying application and server stack management and easing deployment of physical, virtual and cloud infrastructures. Using FastScale technology, companies can run data centers with up to three times more virtual machines without degrading performance.
CA is acquiring privately held NetQoS for $200 million in cash and plans to combine NetQoS’ Performance Center with CA’s eHealth Network Performance Manager and Spectrum Infrastructure Manager. “With the addition of the NetQoS network flow monitoring, unified communications management, and response time analytic network solutions, CA will further strengthen its ability to help enterprise IT organizations and service providers,” said Ajei Gopal executive VP of CA’s products and technology group. The merging of CA and NetQoS assets will provide CIOs and network engineers and operations managers better visibility and control of many critical services. CA’s Wily Application Performance Management will be linked with the NetQoS Performance Center and will provide users with wide application visibility for their business and IT services. CA added that the acquisition will boost its cloud management capabilities, because the new collaborative services will deliver a robust level of network and systems traffic management. It will also build on the cloud services that CA picked up when it acquired Cassatt earlier this year.
Atheros, a supplier of wireless LAN and Ethernet solutions, reported that it will acquire Intellon in a stock and cash transaction valued at $244 million. Atheros said the acquisition will help it achieve its goal of improving connectivity across networking, computing, and mobile device markets. Atheros is betting that power-line networking will become a workhorse network in homes as electronic media devices continue to proliferate. Intellon already makes and markets a broad array of power-line products. In-home power-line use is expected to grow more than 30% a year in the next few years, according to recent market research reports.
Raytheon has purchased BBN Technologies, known for its developmental work on e-mail and the Internet — now marking its 40th anniversary. With its rich mix of military and government contracts, BBN appears to be a perfect fit for Raytheon, whose $23 billion in revenues are dominated by defense and government business. The deal’s financial figures weren’t revealed, but Raytheon said the acquisition isn’t expected to “materially impact” revenue or earnings for the fourth quarter. In recent years BBN bounced around, first being acquired by GTE in 1997, which was itself acquired by Bell Atlantic. The latter firm merged to become Verizon (NYSE: VZ) in 2000, but some BBN networking assets were spun off as Genuity. In 2004, BBN assets were acquired by venture capital firms Accel Partners and General Catalyst Partners. Earlier this summer, David Fialkow, managing director of General Catalyst Partners, indicated that the investors’ strategy of keeping BBN management intact was successful. Robert G. Elmer, president and CEO of BBN, hailed the acquisition by Raytheon saying it will act “as a multiplier on our proven ability to deliver advances to the market rapidly and profitably and better serve our ultimate client, the U. S. warfighter.” In recent months, BBN has landed important defense contracts including a $14 million pact in July from its long-time government research partner, the Defense Advanced Research Projects Agency (DARPA), for language translation technology. Other recent important contracts include advanced networking, information technologies, sensor systems, and cybersecurity. BBN, which traces its roots to MIT, was founded in 1948 by Leo Beranek, Richard Bolt, and Robert Newman. The firm played an instrumental role in the development of packet switching and the Internet, setting up its first Arpanet node at its Cambridge, Massachusetts, facilities in 1970. The first person-to-person network e-mail and the use of the @ sign was also carried out at BBN.
eBay sold control of its Skype Technologies VoIP unit to a group of private investors for $1.9 billion. eBay will retain a 35% equity position in Skype in the deal, which values Skype at $2.75 billion. The lead investor is Silver Lake Partners, and Index Ventures (which was an original investor in Skype in 2004) is I the mix. In addition to London-based Index Ventures, the investors acquiring Skype include Andreessen Horowitz, a venture capital firm led by Marc Andreessen, a co-founder of Netscape, and the Canada Pension Plan Investment Board (CPPIB.) When eBay purchased Skype in 2005 for $2.6 billion and later considerations for a total estimated at $3.3 billion, the online auction company neglected to obtain rights to important underlying software for Skype, whose founders recently initiated litigation against eBay. The peer-to-peer software in question is owned by Joltid, a firm controlled by Skype’s founders. eBay had been planning to conduct an IPO for Skype but, eBay recently noted the seriousness of the Joltid litigation in a filing with the Securities and Exchange Commission. “Skype,” eBay said in the SEC filing, “would be severely and adversely affected and the continued operation of Skype’s business as currently conducted would likely not be possible.” An acquisition of Skype, of course, eliminates the necessity of conducting an IPO by eBay.
> PRIMARY SOURCES:
IT World Canada – http://www.itworldcanada.com
Ottawa Business Journal – http://www.ottawabusinessjournal.com
ZDNet – http://www.zdnet.com
Information Week – http://www.informationweek.com
