The US Justice Department isn’t happy with the prospect of Compuware Corp merging with Viasoft Inc, and plans to take legal action to block the merger. Compuware agreed to acquire Viasoft back in July in a deal valuing Phoenix, Arizona-based Viasoft at over $160m (CI No 3,704). Compuware is now said to be considering its options, which include walking away from the proposed deal, or fighting the lawsuit.
The government says the deal could boost the price of software testing and fault management software for the mainframe market, an area where Compuware is the market leader and Viasoft is number two. Viasoft has recently been pushing its Renaissance mainframe code analysis, Cobol re-engineering and fixing tool suites rather than its fading Y2K products, including tools which will take legacy Cobol code and wrap it into more manageable components. The government identifies this as a promising product that should enable [Viasoft] to become a significant competitor to Compuware.
Acquiring Viasoft will accelerate work under way at Compuware to help our clients better manage maintenance backlogs and extend their legacy applications to take full advantage of e-commerce opportunities, said Joseph Nathan, Compuware president and chief operating officer, at the time of the merger agreement. But Compuware’s argument that one of the reasons for the Viasoft acquisition is for access to its legacy-to-e-commerce tools, is a little hard to believe. Whilst the company has some products in development in this space, it is some way behind competitors like Relativity Inc.
Compuware has also been planning the integration of Viasoft’s Smart Test, Smart Edit and Smart Quest Cobol testing and debugging tools with its own analysis and debugging tool, Xpediter. It’s not clear at this stage whether that means integration at the user interface level or at the code level – code level integration could mean the four tools become one. There are other overlaps too – both companies have Y2K and Euro testing and conversion tools, for instance. The Viasoft services organization and its Rochade enterprise repository for asset management, recently extended to support XML, are also of interest to Compuware. Rochade is being integrated with Compuware’s Uniface application development environment, now being particularly targeted at legacy renovation and e-commerce projects.
Viasoft was founded 15 years ago as a mainframe maintenance company, but moved into the Y2K tools space four years ago to cash in. For a while, the strategy paid off: in 1996, revenues rose 81.5%; in 1997, they nearly doubled. But it soon became clear Viasoft was not making sufficient post-millennial provisions, and it slipped back into the doldrums. The company efforts to expand into areas such as Euro conversion tools in mid-1998, and more recently e-commerce transformation tools for the web-enablement of mainframe applications written in Cobol, hasn’t had a noticeable effect on the company’s bottom line. Viasoft’s recently posted results for the first quarter of fiscal 2000 saw revenue shrank 26.4% to $18.6m, from $25.3m in the same period last year.
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