IBM Corp launched its $60 a share tender offer for Lotus Development Corp yesterday, saying it will close on July 3 unless extended: it is contingent on the redemption, invalidation or inapplicability of the poison pill, and a majority of Lotus shares on a fully-diluted basis being validly tendered and not withdrawn prior to the expiry.
We’re surprised at all the surprise being expressed at IBM Corp making a hostile bid for Lotus Development Corp – the company has been numbered among the four or five most frequently mentioned bidders for the 1-2-3 company: our only suprise is at the price and that Lotus could possibly think it’s worth more than $3,300m (the market does too, since the shares closed at $61.4375 when the bid is $60 a share); as Ben Rose of Hancock Institutional Equity Services told the Wall Street Journal, Lotus’s applications have appeared a dying franchise in the face of competition from Microsoft Corp, and sales have slumped in recent quarters, while Notes is positioned as middleware, and the functions of middleware can be quickly eroded as operating systems and applications add its features, so that Rose described himself as perplexed that IBM would pay as much as $60 a share for Lotus, when Notes isn’t a powerful enough product to overcome Microsoft’s dominance in desktop operating systems; with Lotus, IBM will at last begin to look convincing on the desktop, so the deal is positive for IBM, but the price looks absurdly high, and is seen as an effort to persuade Lotus employees to stay loyal.
At least seven shareholder suits were filed against Lotus Development Corp in the Delaware Chancery Court yesterday seeking a preliminary injunction to halt the tender.
It seems that while Jim Manzi never wanted to sell Lotus Development Corp – his price is said to be $80 a share, he wanted to get out of applications to concentrate on Notes, and according to the Wall Street Journal he suggested to Jim Cannavino last August that 1-2-3 and its friends should go into a joint venture with IBM Corp or that IBM should buy them, and this suggestion was made again back in January; applications fell 20% to $620m last year while communications almost doubled to $350m – but of that, cc:Mail accounted for $107.4m and grew 10%, Notes was only $189.7m, but grew 27.3% – but $3,300m sounds an awful lot to pay for a business that generates only $190m of sales.
Much of the discussion of the IBM Corp bid for Lotus Development Corp has focussed on what it could do for OS/2, but Louis Gerstner made it clear on Monday that he believes that people that think that way are still fighting the last war: with so many common application programming interfaces and the emergence of objects, operating systems are simply not the central issue any more, and tomorrow’s battleground will be in the software that ties those myriad desktops together and enables their users to collaborate.
ICL Plc is looking for a windfall from a successful IBM Corp acquisition of Lotus Development Corp: it believes that other computer manufacturers may be scared off adopting Notes if IBM owns it, and it makes our position easier because those companies are more willing to look at alternative products, Esa Ketola, vice-president and senior manager of ICL-Teamware in Santa Clara told the Wall Street Journal: ICL will try to position Teamware as a complete alternative to Notes.
TIE/Communications Inc, Overland Park, Kansas may put itself up for sale: the telecommunications equipment, software and services company says that to optimise shareholder value, its board appointed independent directors to a special committee that will consider various alternatives, from implementation of strategic alliances to a sale of all or some of the company’s assets; it has received indications of interest from various parties but has not yet decided which, if any, of the alternatives it may pursue.
Ireland’s minister for Enterprise & Employment Richard Bruton announced yesterday that L M Ericsson Telefon AB’s Erics
son Holdings Ltd will invest some ú3.5m to create 150 additional jobs in its design houses, half in Dublin half in Athlone.
Tele Danmark A/S announced yesterday that it would give British Telecommunications Plc a seat on the operating committee of Czech telephone monopoly SPT Telecom AS if it won the tender for a stake.
Contract electronics manufacturer Race Electronics Ltd, Talbot Green, near Cardiff in Wales, has called in the receiver: the company was majority-owned by Alf Gooding’s Gooding Group Ltd: receiver Derek Howell of accountants Price Waterhouse & Co, said he would aim to sell the firm as a going concern.
India’s software industry grew by 52% last year to reach $840m, and is expected to maintain that rate of growth in 1995, the National Association of Software & Services Companies said; exports were up 50% to $495m and home sales rose 54% to $345m; Faqir Kohli, president of the Association, looks for even higher growth in the future; he heads Tata Consultancy Services, India’s biggest software company with turnover of $113m last year.
Capita Group Plc has transferred control of its bailiff services business, John Crilley Ltd to Madagans Plc in exchange for a 20.4% stake in the enlarged Madagans and a deferred payment of up to ú1.29m.
The Performing Rights Society and Learmonth & Burchett Management Systems Plc have finally settled their acrimonious contract dispute and Learmonth is going to have to pay ú2.4m to the the Society in respect of the PROMS project, paying eight installments over five years.
Reuters Holdings Plc announced yesterday that its Dealing 2000-2 automated foreign exchange trading system had achieved its latest target of 20,000 trades a day: the target had been set on February 14.
North Andover, Massachusetts-based FTP Software Inc has opened a distribution warehouse in Eindhoven, the Netherlands: the company says that European customers can now expect delivery in 24 to 48 hours.
Great timing: last week, PC Letter included an open letter to the board of Lotus Development Corp telling it to fire Jim Manzi and sell the company to IBM Corp… still, looking at where IBM might sink its $10,000m war chest, we did review the options in January and we concluded sourly that Novell Inc looks the best bet so it will probably go for Lotus and run it into the ground (CI No 2,577).
We don’t believe in spell-checking software around here (oh, you’d noticed?) and the New York Times has come up with some very good reasons why – such as that the spell-checker in Microsoft Corp’s Word 6.0 will advise changing trackball to traceable and downgrading gigabytes to gigabits – and it seems the Microsoft Network wants to bury not only CompuServe and Prodigy but the very Internet itself, because it suggests that the appropriate fate for Internet is Interment (not in the version we have here); as for Novell Inc’s Wordperfect 6.1, it can’t be bothered to worry its silicon little head with really big numbers and while it is happy with megabytes and gigabytes, when it gets to terabytes, it suggests airily that thereabouts will do.
