10 June 2002 Troubled networking software and services company Novell, best known for its Netware network operating system, has announced the acquisition of application server and web services tools company SilverStream for $212 million (€225m).
The acquisition is part of Novell’s plan to become a leading force in the commercialisation of web services. Novell has recently positioned its directory software as a means of connecting web services and has made it the foundation of its new ‘one Net’ product line.
Nasdaq-listed SilverStream supplies graphical tools for building applications based on components. Its initial focus was on Java objects, but it has recently concentrated more directly on the web services opportunity.
“Novell and SilverStream make a great match,” said David Litwack, CEO of Silverstream. “Add our SilverStream product line, which Web-enables enterprise systems and delivers dynamic applications, to Novell’s consulting and network infrastructure capabilities, and you have all the ingredients to lead the market.”
At just over three times revenues, the acquisition at first glance looks expensive in the current climate. For its fiscal year 2002, SilverStream had revenues of $68 million, but made losses of $51 million (€54.2m).
However, at the end of fiscal 2001, SilverStream itself had, $134 million (€142.3m) in cash. Prior to the acquisition, Novell had a cash pile of $670 million (€711.5m). The purchase price is a 75% premium on SilverStream’s closing price on Friday 7 June.
The new company will now have application development tools, a network directory and, with Novell’s Cambridge Technology Partner’s acquisition, a substantial services business. However, analysts are concerned that the company still lacks scale compared to rivals such as Microsoft, Oracle and IBM.
Novell reported losses of $165 million (€175.2m) on sales of $551 million (€585.1m) for the six months to April 2002.
Little substance to supposed Novell turnaround (10 May 2002)
Novell and Cambridge Technology Partners merge,
but are the two a match? (18 April 2001)
Novell’s road to recovery is still littered with hurdles (1 September 2000)