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March 31, 2005

Peregrine chases relisting as it “evolves wisely”

Peregrine Systems's CEO John Mutch said the company is well on the way to regaining its credibility after it was rocked by an accounting scandal back in 2002, so much so that he is confident of the infrastructure management company relisting on Nasdaq this fall, and is already talking about possible acquisitions.

By CBR Staff Writer

In an interview with ComputerWire, Mutch said that, The reason to relist on the main market is to gain access to capital and resources necessary to grow the business to the next level. It will give us the ability to raise money on a cost-effective basis, and ultimately that is something that we will need to do.

Asked whether that access to capital would be employed for acquisitions, Mutch responded: We will be pursuing organic product line expansion, but the relisting will also help us to fill in some gaps or (make) small acquisitions.

While Mutch was a little cagey about the areas that Peregrine is looking to make acquisitions – assuming it has access to the capital to do so – he did say that, Today we partner for software distribution management. Ultimately we might consider needing to own that functionality.

If Peregrine is serious about wanting to own software distribution and software license compliance technology it may need to move fast, as many of the companies in that space have already succumbed to consolidation in that sector. Existing Peregrine partner Tally Systems has just been acquired by Novell, for example, and before that, HP bought Novadigm, and BMC bought Marimba.

One company that could make a potential acquisition would be another of Peregrine’s existing partners, LANDesk Software, though that company is also gearing up for an IPO so again, Peregrine would need to move fast, but may not be able to afford the privately-held vendor anyhow.

Another area where the company may consider acquiring as well as organic expansion is in the area Mutch calls application mapping and process mapping. There are a lot of companies in that space who are potential partners or acquisition candidates, James Zierick, Peregrine’s SVP strategy, marketing and corporate development told ComputerWire.

San Diego, California-based Peregrine is on the rebound. It filed for Chapter 11 bankruptcy protection in September 2002 after a run of revenue-recognition irregularities, two changes of auditors, and the purging of all its top executives. It was subsequently delisted and has been trading on the over the counter (OTC) market since.

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Mutch was made president and CEO in August 2003, before which he had served as CEO and president of HNC Software, which was acquired by Fair Isaac and Company in August 2002. Since he’s been at Peregrine he has recruited a number of his former colleagues over to the ailing infrastructure management vendor, including Peregrine’s CFO Ken Saunders, who joined in August 2004, having before that been at both Fair Isaac and HNC. Russ Mann, Peregrine’s SVP strategic initiatives who Mutch hired in November 2004, was also at Fair Isaac and HNC.

As well as surrounding himself with familiar faces, Mutch’s Peregrine has a new marketing slogan: Evolve Wisely. Mutch said the slogan reflects the company’s ability to help its customers improve the relationship between their infrastructure, outsourcers, and customers, though its combination of service and asset management software.

But since Symantec has just bought Veritas, and Computer Associates and IBM already had systems management as well as security and storage management, the question must be asked whether infrastructure management is a big enough niche to support a company the size of Peregrine. As Mutch put it, It would be disingenuous to say that an HP or an IBM might not look at us and say ‘you are now a great $200m company’ and think about acquiring us. We’re a public company.

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