Mergers &acquisitions
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Key M&A activity in the IT sector in February 2005.
While Windows and Office have provided MICROSOFT with unmatched wealth, the company's potential for growing that install base is diminishing. If it is to sustain its rate of expansion, Microsoft needs to penetrate deeper into the corporate IT market. And its February acquisitions highlight just two areas where it thinks it can do that.
Trying to further shake its reputation for being weak on corporate security, the company snapped up Sybari Software, a New York-based specialist in anti-virus, anti-spam and secure instant messaging software. Microsoft says Sybari's add-ons - which already work with SharePoint collaboration tools, the Internet Explorer browser and Microsoft Portal software - will be further integrated into the company's line up.
This also ties into Microsoft's second recent acquisition, Groove Networks. A supplier of 'ad hoc' collaboration tools, Groove was formed in 1997 by Lotus Notes creator Ray Ozzie, who will become a Microsoft CTO. Microsoft hopes the purchase will appeal to distributed organisations and those with many mobile workers.
On a related front, avanade, the joint IT services venture between Microsoft and Accenture, enhanced Microsoft's prospects in the enterprise resource planning (ERP) market with the acquisition of Chicago-based En'tegrate.
Companies rolling out enterprise resource planning packages have often complained of difficult and lengthy implementations. En'tegrate, with its ERP Complete offering, promises to dramatically reduce implementation times for customers of Microsoft Axapta - the company's ERP package aimed at the manufacturing, distribution, retail and services industries. Since it formed its Axapta practice in 2000, En'tegrate claims it has implemented more seats of the ERP package (which Microsoft acquired with Navision in July 2002) than any other firm in the US.
One vendor closely watching Microsoft build a strong presence in the business applications market is SAGE. However, while Microsoft seeks to build packages that can be applied globally, the Newcastle, UK-headquartered company continues its strategy of conquering the accounting software market with products built specifically for local conditions. Its £10.3 million acquisition of Symfonia takes it into the Polish software market.
The prospect of expanding into new markets was also the impetus behind AGILE software's $41.5 million purchase of 'collaborative visualisation' specialist Cimmetry. While product lifecycle management vendor Agile has customers mostly in the automotive, consumer products, defence and life science industries, Cimmetry's install base is largely in manufacturing, electronics, engineering and construction. Agile says it intends to keep Cimmetry's flagship package, AutoVue, which enables the viewing printing, plotting and conversion of engineering drawings, as a standalone offering. It expects a $12 million boost to revenues from the deal.
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