CA Pays Premium for Concord Communications

Computer Associates made Concord Communications an offer it couldn’t refuse, announcing it would pay US$17 per share — a 71 percent premium — for the performance management software company. CA will lay out $330 million in cash and assume $20 million of Concord’s debt.

Concord has been struggling of late, George Hamilton, senior analyst, Yankee Group, told TechNewsWorld. The company’s preliminary earnings report for first quarter noted expected total revenue between $28.5 million and $29.5 million. The company expected a loss per share between 11 cents and 15 cents.

Product Overtaken

“Concord five years ago really had a state of the art network performance management tool,” he said, adding that “the product hasn’t advanced enough. InfoVista came along with really cool graphical tools and surpassed them.”

The company had fallen behind in needed improvements for its management software, and partly because of that, it has had some difficulty signing on new customers, Hamilton said.

“With CA’s resources, they can address some product issues. Hopefully they will put the resources behind it to make Concord a much more flexible tool,” he said.

CA’s strength lies in systems management, so the addition of Concord will give the company a chance to go for what Hamilton termed the holy grail: the integration of fault and performance management.

“CA has never really had the network management cache; it was always more of a systems management company with about 70 to 80 percent mainframe business. Just recently that’s become more like 50 percent,” he said.

Employees Will Stay

Most of Concord’s 640 employees are expected to stay with CA when the deal closes, which is scheduled to happen within four months, the companies said.

The business will be folded into CA’s newly created Enterprise Systems Management Business Unit, headed by Alan Nugent, who left his post as Novell CTO in mid-March to move to CA.

Hamilton said he expects to see more acquisitions in the network management industry.

“We’re basically going to see many of CA’s competitors fill holes to do more performance management. There’s going to be consolidation in the industry,” he said.

“It could be that IBM, HP and CA are the only ones left standing. Even BMC [Software] could be acquired, but that’s just a guess.”

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