Corporate Maneuvers and Results

On the acquisition and divestiture front, Cisco Systems Inc. is acquiring privately-held ScanSafe Inc., a software-as-a-service (SaaS) digital security provider, while IBM Corp. sold its product lifecycle management (PLM) business to Dassault Systems, a unit of Group Dassault. On the earnings front, Symantec Corp. and Unisys Corp. reported strong quarterly earnings while SAP AG reported disappointing results.

Focal Points:

• Cisco is planning on paying $183 million in cash to acquire the London- and San Francisco-based ScanSafe, a player in cloud computing. With the acquisition of ScanSafe, Cisco is executing on its vision to build a borderless network security architecture that combines network and cloud-based services for advanced security enforcement, according to Cisco executives. The acquisition brings together the Cisco IronPort high-performance Web security appliance and ScanSafe's SaaS Web security service. Additionally, ScanSafe's service will be integrated with Cisco's AnyConnect VPN Client. The acquisition is expected to close by year end and the unit will become part of Cisco's Security Technology Business Unit.
• IBM sold its sales and client support operations related to Dassault Systems' product lifecycle management (PLM) software for roughly $600 million in cash to Dassault Systems. For Dassault, this means a return of its key assets that had been managed by IBM. IBM has struck a new partnership arrangement with Dassault, as the company now becomes an IBM Global Alliance Partner.
• Symantec reported its second quarter fiscal 2010 results. Net revenues for the quarter were $1.47 billion, down three percent from the previous year's quarter, when it had revenues of $1.52 billion. On a GAAP basis, net income for the quarter rose to $150 million, an increase of 19 percent from $126 million in the year-ago period. The profit increase was mostly from cost cutting. Meanwhile, Unisys reported third quarter revenues of $1.16 billion, down 11.6 percent from third quarter of 2008. GAAP net income for the third quarter was $61 million, whereas in the third quarter of 2008 the company incurred a loss of $34.7 million. The company attributes its profits to a new mainframe and added cost cutting. The services business at Unisys accounted for $1 billion in sales.
• SAP announced its third quarter 2009 results. Net revenues for the quarter were €2.51 billion, down nine percent from the year-ago quarter. Earnings on €606 million, a drop of only one percent from the previous year's quarter. SAP stated it has had poor sales in Japan and emerging markets, and it is likely to miss its targets for the year. The company is in the process of reducing staff by 2,900 employees, leaving the firm with 48,000 full time equivalent employees by year end. To make up some of the revenue shortfalls, the company is driving more multi-year agreements. The next version of Business ByDesign, the company's SaaS offering, will focus on multi-tenancy, flexibility and extensibility features. Company executives also stated SAP has added about 10,000 new customers this year, 4,000 in the third quarter, with many of them coming from the BRIC (Brazil, Russia, India, and China) countries.

Experton Group believes traditional hardware and software markets continue to get squeezed, forcing vendors to view cloud computing as a potential wave of growth. Enterprises can expect to see vendors shift their business models toward appliances, cloud computing and other outsourcing services, consulting and integrated solutions, IT executives should understand the strategies of its strategic providers and determine how they can utilize similar strategies within their own organizations.