Progress ties to catch the XML wave
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Progress Software buys XML database company Excelon.
In the current business climate, it takes more than cutting edge technology to keep a software vendor alive. Over the past few years, Burlington, Massachusetts-based Excelon has transformed itself from a specialist in object database software into a vendor of web services development technology, XML databases, and business process management software. But that was been enough to prevent it from being swallowed up by 4GL, relational database and integration software company Progress Software in mid-October.
The acquisition, for a bargain $24 million in cash, will reinforce Bedford Massachusetts-headquartered Progress's own expansion. The company has been moving beyond its primary line of application development tools and database for independent software vendors (ISVs) to embrace enterprise-level messaging queuing and XML integration software, sold largely through its Sonic Software subsidiary.
In fact, much of Excelon's more advanced software will now sit within the Sonic portfolio, bolstering the unit's revenues, which have risen to about $15 million over its three-year existence. At the same time, the Excelon's object database, ObjectStore, will become part of the traditional Progress line up, alongside the company's eponymous relational database and 4GL.
Despite its move to newer technologies, two thirds of Excelon's $35 million in annual revenues still flow from object databases. Through sales to telecoms and financial services organisations, Object Store has remained the market leader in that market, but has seen demand tail off. On the other hand, customers' interest in XML databases has been sparked by a need to store documents and software objects that use the Internet tagging language. For 2002, Excelon is expected to chalk up revenues of $7 million in XML databases, competing most commonly against Software AG's Tamino product.
According to Greg O'Connor, president of Sonic Software, Progress has been on the look out for potential acquisitions for the past 18 months, having considered 150 different companies. Underpinning the exploration has been the strong cash generation and profitability provided by its large installed base of ISVs. At the end of the last quarter, available cash stood at $197 million, while revenues for the year to 30 November are on target for around $270 million to $275 million, a 3% to 4% rise.
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