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October 11, 1998

USINTERNETWORKING EYES MORE ACQUISITIONS & APPS AREAS

By CBR Staff Writer

Ambitious start-up application hosting company USinternetworking Inc is looking for more acquisitions among application consultancies. Last week it bought Advanced Communications Resources, based in New York, which specializes in financial services software. USi’s strategy is to buy consultancies that work with applications such as those from PeopleSoft and Microsoft, license the software and host it for customers at data centers in the US, Europe and Asia. The company was only formed at the start of the year and immediately tried to buy ISP PSINet Inc for $400m, but was rebuffed (01/23/98). The Annapolis, Maryland company then signed a deal for capacity with US West in July, which also involved the telco taking a minority stake in USi. Company president and chief operating officer Stephen McManus says the next application area it will look at is supply chain management, but it will not be looking to buy any companies in that area until next year, he says. The company only launched its direct sales effort last week, so it should see revenues per client start climbing towards its target of $35,000 per client per month; right now it’s between $15,000 and $18,000 per month, says McManus, a former senior sales manager at Silicon Graphics Inc. USi signs its customers to three year contracts and, believes McManus, is on its own in this space at present. He says although it has data centers overseas, it has no plans yet to look for customers outside the US.

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