Financial Deals and Earnings

 

AT&T Inc. acquired Plusmo Inc., a provider of cross-platform mobile application solutions, while Compuware Corp. intends to purchase Gomez Inc., a supplier of Web application experience management, and Emerson Electric Co. is expected to acquire IT solutions provider Avocent Corp.  On the earnings news front, Accenture PLC and Infosys Technologies Ltd. reported results that showed the systems integration and outsourcing businesses are still being challenged.

Focal Points:

• AT&T reported it was acquiring privately-held Plusmo for an undisclosed sum. The unit will become a part of AT&T Interactive. Plusmo brings to AT&T an open standards technology that will simplify mobile application development, accelerate innovation and deliver a better application experience for consumers. Compuware plans to acquire privately-held Gomez, headquartered in Lexington, MA, for $295 million in cash. Gomez is a provider of web application experience management using a software as a service (SaaS) model and employs 272 people around the world. In a move designed to improve its energy efficiency options for data centers, Emerson Electric plans on acquiring Avocent Corp. for $1.2 billion. The acquisition, which will become part of Emerson's Network Power unit, will help Emerson to offer total infrastructure management solutions to its data center customers. Avocent had sales of $657 million in 2008 while Emerson recorded sales of nearly $25 billion for the period, with about $2.6 billion in data center-related revenues. In other acquisition-related news, the word on the street is that Brocade Communications Systems Inc. may have put itself up for sale. Two potential buyers being bandied about are Hewlett-Packard Co. and Oracle Corp.
• Accenture reported its fourth quarter fiscal 2009 results. Net revenues for the quarter were $5.15 billion, down 14 percent from the previous year's quarter, when the company reported $6.0 billion in revenues. Net income for the quarter was $255 million, down from $435 million in the year-ago period. Full-year results were slightly better. Net revenues slipped eight percent from $23.4 billion in 2008 to $21.6 billion in 2009. Net earnings for the 2009 fiscal year were $1.59 billion versus $1.69 billion in its fiscal 2008 year. New bookings for the fiscal year were soft, reflecting ongoing weakness in the consulting business.
• Infosys announced its second quarter 2010 results. Net revenues for the quarter were $1.15 billion, down five percent from $1.22 billion in the year-ago quarter. Earnings on a GAAP basis were $317 million, a drop of one percent from the $320 million it earned in the previous year's quarter. In reporting against the company's four major segments, its financial services and retail segments saw growth while its manufacturing segment was flat and telecom unit shrank.

Experton Group believes the business and IT climates is, and will be, challenging, with a few bright spots over the next two years. Some segments, such as healthcare and public sector (federal), will see growth as well parts of the Asia Pacific region. However, most IT companies will be re-evaluating their business models and watching their top and bottom lines closely. Vendors with deep pockets will continue to acquire firms to fill in strategic voids as well as to extend their reach into other markets. IT executives should confer with their strategic business partners to understand how they are evolving their business models to address the business and technology challenges and opportunities, and map these shifts to the enterprises' own transformation plans.