Steve Gardner, CEO of infrastructure management company Peregrine Systems, says he doesn't believe there's any great benefit in surprising customers. Which is why, when the company's management decided to sell
off a large chunk of acquired technologies, its decision was openly announced at Peregrine's March 2002 user conference – before a buyer had even been found.
Peregrine is to sell off assets acquired in its 2000 purchase of electronic data interchange (EDI) specialist Harbinger and 2001 deal to buy business-to-business (B2B) integration tools specialist Extricity. Peregrine is paying investment bank Credit Suisse First Boston to "explore strategic alternatives" to keeping the technologies.
Peregrine's purchases of both Harbinger and Extricity have been the subject of much scepticism, and the company's muddled strategy for integrating Harbinger and Extricity into Peregrine has been repeatedly questioned. Laurie Orlov, an analyst at market research company Forrester Research, has been one of Peregrine's fiercest critics. "Peregrine [has] come to its senses," she said when the sell-off was announced.
Among the assets for sale is Get2Connect, the global trading network Peregrine inherited from Harbinger, which handles 1.3 million tranactions daily and serves some 40,000 companies – down from 42,000 in 2000, Orlov points out. The company also intends to sell of some of Extricity's data transformation and business process integration technology, but will retain the rights to certain adaptor technologies for integrating packaged software internally.
These technologies, says Gardner, comprise the company's supply chain enablement business, and do not fit with the company's long-term strategy, which is to concentrate on infrastructure management tools. But analysts argue that this is because the company has back-tracked on the long-term strategy it devised in 2000, when like many other software companies, it was pursuing a fashionable B2B vision. Then, company executives argued that enabling Peregrine customers to buy goods and components as well as track and monitor them throughout their lifecycle was a logical extension of Peregrine's historical focus on asset management.
The change of vision will come at considerable cost. Peregrine paid $2.1 billion for Harbinger at a time when Internet valuations were absurdly high. The Extricity purchase, a year later, cost the company $168 million. The company has no chance of recouping these investments in a sell-off. "The value we expect to receive in 2002 is undoubtedly less than we paid. It's not something we're particularly proud of," concedes Gardner. Nor is it clear that Peregrine will find a buyer for its cast-offs. Orlov of Forrester proposes services companies IBM Global Services and EDS as prospective purchasers for the Get2Connect network, while analysts at AMR Research suggest integration company GE Global Exchanges (GXS) as a possibility. If no buyer is forthcoming, Peregrine shareholders may be forced to continue supporting the supply chain enablement business as a spin-off company.