It may be no co-incidence that on the same day that networking R&D group BBN reported a loss of almost $8 million to its second quarter, $16.5 million for the half to December 31, it has announced a re-organization designed to lump most of its high profit yielding business into one unit.
The company is now split in half with a newly inflated Internet based business and the remaining BBN Systems and Technologies. The buzz around the Internet being what it is today, it is no surprise that BBN Planet, its erstwhile Internet managed network service focused on firewall technology and bringing security to the Internet, will form the hub of the new business unit and will retain that name. It will also absorb other BBN Internet related activities such as the network management contract for America Online and its fledgling internet dial-up services and its network construction consulting group. This new group will account for roughly 20% of revenues at $27 million (out of $124 million) for the half year.
This leaves its key contract R&D business, both federal and commercial and roughly half of its business, mostly on cost plus contracts, lumped in with its loss making BBN Domain pharmaceuticals and manufacturing software and its Butterfly parallel processing hardware business.
No-one at the company would comment on the reconstruction and what it may lead to, but it certainly leaves questions about whether all staff will survive, and what will happen to strategic investors such as AT&T Ventures which bought into BBN Planet for $8 million in the second half of last year and whether it accepts a smaller portion of a bigger business. On the one hand this could be BBN moving smartly to divert attention from a heavily loss-making year, but it would be foolhardy not to raise the spectre of the less glamorous businesses being dumped in the near future, with BBN cutting back to its lifeblood contract R&D and Internet related activities.
