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October 7, 1999

Macromedia Moves Into Content Management & Buys Andromedia

By CBR Staff Writer

By Nick Patience

Macromedia Inc set out yesterday to position itself as more than just a provider of web authoring tools and now wants to sell the software to mange and deliver the content as well. To that end it is acquiring privately-held Andromedia Inc for about $275m in stock and developing a server-based content management product code-named Project Whirlwind.

Macromedia will combine Andromedia’s Aria monitoring software and its LikeMinds personalization tools with its DreamWeaver authoring tool into something it’s grandly calling an eBusiness infrastructure. The details of that were on the light side yesterday, but it will include all the Macromedia tools, Andromedia’s and Whirlwind. The last of those will be server- based and will manage content from DreamWeaver and other vendor’s tools, will do version control and verification and will also deploy the content. In that respect it will be competing with tools like InterWoven Inc’s TeamSite and will be in what it terms as coopetition with Vignette, which it also partners.

Content management is a hot area at the moment and Macromedia clearly feels its got to move fast, but despite licensing some technology from StarBase Corp to speed the development process, the product will not be available for 12 months, according to Kevin Lynch, Macromedia’s head of engineering who led the development of DreamWeaver. He said that Macromedia is also looking to include workgroup tools into DreamWeaver, acknowledging that web development these days is usually a team effort, rather than the work of a lone code jockey.

Macromedia is extending its relationship with Broadvision Inc by making DreamWeaver the exclusive front-end tool and also announced versions of LikeMinds and Aria tweaked to perform better with Broadvision. Macromedia is also teaming with iXL, which has just bought $1m of Macromedia’s tools to standardize on the company’s products for web authoring. And iXL rival USWeb/CKS is also getting in on the act, with a slightly woollier commitment, stressing that it is committed to help Macromedia with the development of its eBusiness infrastructure, i.e. new products.

Kent Godfrey, the CEO of Andromedia, who will be joining Macromedia in an unspecified senior management position, said the rationale of combining his 125 or o employees with the 600 or so of Macromedia is that it makes more sense to put the personalization and monitoring capabilities into a web site when you are authoring, rather than when it is already up and running. Rob Burgess, Macromedia’s CEO says the company is buying a start in what could be a huge market. The company is issuing about five million shares to pay for the acquisition, and it will be dilutive this year by about 10-15 cents per share an finally accretive in 2001. Macromedia will take a fiscal third quarter $5m charge as a result of the acquisition. Andromedia did $2.6m in sales in the first six months of this year. Burgess says Wall Street is very comfortable with these sorts of numbers. Macromedia’s shares closed down $3.53125, or 6.4% at $51.4375, but that’s off a recent surge. á

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