CA makes Sterling acquisition

The multi-billion dollar acquisitions of Sterling Software by Computer Associates, Growth Networks by Cisco and GRC International by AT&T was top international news last week.

At home, the ongoing Spicer/IQ Group situation, the Datatec overseas listing news, and a spate of resignations dominated local headlines.

Having now digested the acquisition of Platinum Technology that it announced last March, Computer Associates (CA) is on the trail again and has snapped up Sterling Software, in what is likely to be the start of a series of take-overs by CA this year.

Sterling Software was in some financial trouble, with heavy losses recorded for its last financial year, and has suffered the same fate of many others in that position. As is common with these CA scenarios, some of Sterling Software`s products will be absorbed, developed and exploited, but many, especially competing ones, may well be abandoned with associated jobs being shed at the same time.

• we had disappointing full-year numbers from Explorer (although in profit - just, significantly short of prospectus forecasts);
• very good interim numbers from AST-A (Q2 slightly less profitable than Q1);
• good interims from Compu-Clearing Outsourcing, Prism Holdings (maiden results) and Smacsoft Group;
• satisfactory half-year numbers from Paragon (revenue up a little and income down a little on last year`s equivalent figures);
• disappointing interims from Crux (income only 25% of the last full-year figures), Paradigm and Seartec (income well down on equivalent figures for previous year); and
• profit warnings from I-Fusion, Seartec and Spicer Holdings.

Additionally, there has been a number of senior resignations including Mario Pinhero, chairman of CCH (not accepted by the board); MS Vlok, a director of Idion (re proposed US acquisition), Jeff Zafiropoulos, CEO at Crux, and Mike Higgo, a senior executive at Spicer. This comes hot on the heels of several resignations at Bryant and USKO.

[Local]

[Cautionary]

[Calendar]

Other local news included:

• the announcement that African Lakes, the London-based and listed conglomerate that is also the major shareholder in Africa Online, will also list on the Nairobi Stock Exchange;
• Progress Software has set up a local subsidiary in SA;
• Dimension Data is now considering a NASDAQ listing, rather than one in London;
• Ixchange has delayed its NASDAQ listing of Goldmine until later this year;
• and Datatec intends to list its E-Services Group on the London Stock Exchange and expects its US-based Westcon to list on NASDAQ in mid-year.

Additionally, MSI Cellular is officially opening its offices next month, and is intending to set up a central access hub for its many cellular operations across Africa, and is a member of the Khuluma 084 consortium bidding for the third cellular licence.

It also looks as if the telecoms divisions of Eskom, Denel and TransNet are merging to form a new parastatal that is likely to be the major contender for the second fixed-line telecommunications licence in SA when deregulation starts in 2002. It`s a pity we have to wait so long for partial deregulation, since the lack of bandwidth and the high cost of calls are the major growth inhibitors to both business and the empowerment and upliftment of people in this country.

• Toshiba announced it was investing $2.3 billion into a new business unit, I-value Creation, that is to focus on e-commerce and Internet content;
• India`s Infosys Technologies has been given the go ahead for acquisitions of up to $10 billion, with rumours suggesting that Cambridge Technology Partners is on its list; and
• Alcatel looks to be very close to closing a deal to acquire Canadian-based Newbridge Networks, and one that may even be announced tomorrow.

Additionally, it seems that PricewaterhouseCoopers is likely to split into three entities, with the management and consulting unit, worth $4 billion, being considered for a public floatation.

[International]

Other international news included:

• the appointments of Anthony Adkins as CEO of Neopost, David Crisp as CEO of NeoPost Online, Geoffrey Koblick as president and CEO of IMSI, and John Gavin as the CFO at Cambridge Technology Partners;
• the resignation of Larry Begley, the CFO at Razorfish; and
• the announcement of job losses at Quantum`s DSS Group and Viasoft (20% to 25%).

We saw excellent figures from ACT Manufacturing, Analog Devices, Applied Materials, Brocade Comms Systems, Ciena (back in the black), Dialog Semiconductor, Ditech Comms, Framfab, LTX, Navison, Network Appliance, Nvidia and Pac-West Telecomm.

Losses came from Able Telecom, ACX Technologies, Aetrium, Agile Software, Allen Telecom, American Software, Anacomp, ASD Systems, Astea International, AT&T Canada, Bitstream, Bolder Technologies, BTI Telecom, Cablevision Systems, CacheFlow, Call-Net Enterprises, Cambridge Technology Partners, CE Software Holdings, Centigram Comms, Chinadotcom, Clearnet Comms, Comsat, Conductus, Data I/O, Datalink.net, Datum, Digital Courier, DynamicWeb Enterprises, e-Net, Electronic Tele-Comms, eShare Technologies, Etec Systems, Euronet, Evans & Sutherland, Exactis.com, FirstWorld Comms, Global Crossing, Hummingbird Comms, Hybrid Networks, Information Resource Engineering, Intelidata, Intelligroup, Intermedia Comms, Jacada (just), LanOptics, Level 8 Systems, Lycos (better than expected), Metricom, Microcell Telecomms, Micro-Integration, Mpower Comms, Navidec, Netcall Plc., Nextlink Comms, NXT, Pegasus Comms, Perceptronics, Predictive Systems, Primix Solutions, Prodigy Comms, QMS, Razorfish, RiT Technologies, S1, Scan-Optics, Sipex, Socket Comms, SpectraSite Holdings, SVI (a member of the Softline Group), Sycamore Networks, TransAct Technologies, Viisage Technology, Visual Data and VTEL.

Good numbers were recorded by ADC Telecomms (back in the black), Agilent Technologies, Ansoft, ASM International NV, Barak ITC, CompuCom (back in the black), ePlus, Hadco, Logility, Modem Media 9back in the black), Multi-Link Technologies, Novell, Philips, Royalblue Group, SCM Microsystems (back in the black), Sema Group, Serena Software, Sierra Wireless, Sipex, Softrax, Software AG, SPSS (back in the black), Superior Telecom (back in the black), Symbol Technologies, TeleTech Holdings, Trend Micro, Viacom and Zebra Technologies.

Satisfactory results came from 3Dlabs (back in the black), AMS, Bell Microproducts, Charter Comms, CyberOptics, Elite Information Group (back in the black), ENCAD (back in the black), Ibis Technology (back in the black), ICT Group, Ingram Micro, Merant, NZ Telecomms, Primark, SEMX (back in the black), Software Spectrum, Sunquest Information Systems, Syntel, TDK and WM-data AB.

Mediocre returns came from Bell & Howell, Canon, Compel Group, Crystal Systems Solutions, ForSoft, HP (slightly better than expected), Macro 4, NeoMagic, Pacific Internet, Telekomunikacja Polska SA, SBE, TietoEnator Oyj and Xaar (back in the black.

Very poor results came from Ansoft, C/TAC NV, CapRock Comms, EMS Technologies, Equinox, Microlog (but back in the black-just), Micros-To-Mainframes and TeleSpectrum Worldwide.

Other financial news included a profit warning from Inacom and share split announcements from Advent Software, Agile Software, Analog Devices, Applied Materials, Brocade Comms Systems, Elantec Semiconductor, Macrovision, Network Appliance, Nextlink Comms, Philips, Symbol Technologies, Tiscali and USA Digital.

There were excellent IPOs from customer interaction company Apropos, broadband data company ChoiceOne Comms, e-business infrastructure company Chordiant Software, business-to-business company Eloquent, Giga Media, an Internet communications company and Inforte, an e-business enterprise.

Additionally, Baan is under threat from a possible de-listing from the Amsterdam Stock Exchange, unless its shareholder equity remains positive (it is currently just in the black).

Locally

Advtech (-26.8%)
C-Tech (-50%)
Dectronic (-40%)
Educor (-24.1%)
I-Solutions (+63.3%)
JemTech (-66.6%)
NetActive (+40.6%)
Seartec (-23.6%)
Spicer (-29.3%)
Streamworks (-26.9%)
Y2Ktec (+40%)

Internationally

Applied Imaging (+56.9%)
American Semiconductor (+35.3%)
BEA Systems (+35.2%)
Brocade Comms Systems (+34.6%)
CE Software (+47.8%)
ConMat Technologies (+37.9%)
Genicom (+50%)
NetObjects (+40.9%)
NeoMagic (-31.4%)
Psion (33.1%)
Sanchez Computer (+56.4%)
Scan-Optics (-31.6%)
SCM Microsystems (+54.3%)
Serena Software (+33.3%)
Triant Technologies (+36%)

Microsoft and Bill Gates have been very much in the news again, in addition to the coverage surrounding the Windows 2000 announcement.

It seems Bill Gates has a challenger for his position as the world`s richest man in terms of equity holdings in their own company. Masayoshi Son, founder of Japanese-based Softbank, is now worth close to $70 billion with his 38.2% stake in Softbank and is closing in on Gates` $79 billion. Additionally, it seems that following the Corel/Inprise merger, Microsoft now owns a 4% holding in this Linux rival.

I will be away for a few days later this week and as a consequence will not be producing a column next week. However, the one dated 6 March will cover the relevant two-week period.