New Year brings tech mergers
Published: 05 Jan 2004 10:00 GMT
Several technology companies announced acquisitions to strengthen their market positions at the start of the New Year, including communications-chip maker Agere Systems and identity management firm Netegrity.
On Friday, Agere Systems acquired TeraBlaze, a privately held developer of Gigabit Ethernet switching products, for $21m (£11.74m) in stock. All 16 employees of TeraBlaze will join Agere, including TeraBlaze founder and chief executive Shankar Muhkerjee.
Agere, which supplies chips used for cellphone and Wi-Fi applications, said it bought TeraBlaze to bolster its ability to deliver high-speed switches on a single chip for computer networking. Market research firm Dell'Oro Group estimates that the Gigabit Ethernet switch market will total about $12bn in 2004.
"The acquisition of TeraBlaze advances our strategy to take share in the fast-growing Gigabit Ethernet market," Sohail A Khan, executive vice president of Agere's Infrastructure Systems Group, said in a statement.
Agere said the purchase would result in a $12m to $14m charge for in-process research and development. Excluding that charge, Agere said, the purchase would impact earnings by less than $0.005 per share for fiscal 2004, which will be offset by cost reductions.
On Wednesday, Netegrity scooped up Israeli start-up Business Layers for $42.5m, including $15m in cash and $27.5m in stock.
Netegrity plans to integrate Business Layers' e-provisioning technology within its identity and access management product. It also will continue investing in the provisioning technology as a standalone offering. Provisioning software helps companies handle security and increase efficiency by automatically allocating information technology resources among employees, customers, contractors and others, as dictated by corporate policy.
"Netegrity has long recognised the strategic importance of provisioning and its key role in identity management," chief executive Barry Bycoff said in a statement. "The market is clearly evolving to an integrated identity and access management solution that spans the enterprise and beyond."
Netegrity is expected to keep Business Layers' 50 employees and its research and development centre in Israel.
Excluding acquisition-related charges, Netegrity said it expects to be profitable in the 2003 fourth quarter and the 2004 first quarter.
On Thursday, TechTeam Global, an information technology outsourcing provider bought Digital Support Corporation for $6.3m. DSC provides helpdesk, systems integration and other outsourcing services to government and commercial customers.
TechTeam said the deal includes an additional payment of up to $2.5m if DSC meets specified income objectives and other conditions over the next two years. TechTeam expected the acquisition to generate after-tax income of between $0.07 and $0.10 per share for 2004.
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