Infy may announce European buy today

Infosys Technologies Ltd, India's second-largest software services exporter, may announce an acquisition in Europe on Wednesday.

The size of the deal, expected to be in the back-office services segment, could be around $200 million, they said, citing unnamed sources.

Infosys, whose customers include ABN AMRO, Goldman Sachs and Airbus, was close to acquiring the finance and accounting back-office services arm of Dutch consumer electronics group Philips.

Patni buys US co Taratec for $27 m

Patni Computers has made its fifth acquisition by buying out US-based life science information technology consulting company Taratec for $27.2 million in an all-cash deal.

The acquisition, funded through internal accruals, will see an upfront payment and a three-year contingent payment depending on the performance. This gives Patni an entry into the life sciences segment. Taratec provides integrated business, IT and regulatory compliance products and services, and has over 150 people on its rolls with centres in the US and Puerto Rico. Taratec, with a topline of $20 million, has over 75 clients in some of the leading companies in the life sciences industry such as Aventis, Glaxo Smithkline and Pfizer, among others.

According to industry statistics, IT spend by life science firms is expected to reach $22 billion by 2009 with IT services and software representing the largest growth areas. Typically, life sciences companies can spend over $1 billion and take over 7-10 years to launch a product with a heavy dependence on IT.

The life sciences market is going through a change with increasing pressure on growth and margins. Leading pharma companies are trying to use IT to drive research and development (R&D) and business objectives and performance.

Taratec also brings in long-term customer relationships which will be valuable for Patni in getting a headway into the segment.

The primary markets for Patni through Taratec will be the US and Europe, though Japan is a strong future potential.This is the second biggest acquisition for Patni after its buyout of Cymbal for $78 million in November 2004.

Patni for some time has been acquiring a few companies with a consulting capability, and in the first week of July 2007 had acquired a telecom consultancy firm called Logan-Orviss.

Mastek acquires US-based LLC (Vector) for $9 mn

IT solutions provider Mastek Ltd on Thursday announced the acquisition of US-based Vector Insurance Services LLC (Vector) for $9 million.

Vector is a technology solutions provider and third party administrator that focus on the North American life and annuity insurance industry, having two of America's largest insurance carriers as its customers.

The acquisition will be done by Mastek's wholly-owned US subsidiary MajescoMastek which will be acquiring a 90 per cent equity stake in Vector in an all-cash transaction for $4.5 million, as quoted by its Chairman and Managing Director, Sudhakar Ram.

"This is payable at closing and a similar amount payable over the next two years as earn-out based on business performance. The acquisition is being funded through internal accruals," Ram said.

This acquisition is revenue and earnings accretive to Mastek and is expected to strengthen the opportunity pipeline for the company in the insurance vertical.

Mastek will now be able to offer a more complete solution for insurance carriers including new business, underwriting and policy administration products by adding 'software as a service (SaaS) capabilities to its existing end-to-end enterprise software solution offerings.

The Vector operation is currently in the process of getting integrated with Mastek's existing operations, which should get implemented by August 2007.

The existing management team of Vector will continue to look after the business, led by its founder Harold Apple who has extensive insurance sector experience and will report to William McCarter, President of MajescoMastek.

Commenting on company's performance, Ram said "we are targeting a 35 per cent growth in dollar terms in FY08. We believe this level will be sustainable going forward."

Mastek is looking at adding three more verticals, which includes healthcare in the near future.

On the company's expansion plans, Ram said that Mastek has taken up expansion plans by adding 1,500 seating capacity at its Mhape unit. It is also planning to set up a 5,000 seating capacity unit near Chennai.

The company's headcount will increase from the present 3,500 to 10,000 in the next 2-3-year period.

For the July-September 2007 quarter, Mastek expects its consolidated revenues to be in the range of Rs 205-210-crore.

Net profit after tax and minority interest is likely to be around Rs 25-26-crore.

For the full year ended June 30, 2007, the company posted revenue of Rs 812.7 crore as compared to Rs 701.1 crore last fiscal. The net profit stood at Rs 90.4 crore, translating into an EPS of Rs 31.8.

Google to bid for wireless airwaves

Google Inc said that it would take part in a major auction of wireless spectrum Airwaves, meeting a minimum required bid of $4.6 billion, if US regulators added a sale condition that Google said would promote an open wireless market.

The prospect of Google's participation in the auction escalates the debate over how the valuable airwaves should be used.

Ten days after Federal Communications Commission Chairman Kevin Martin floated a proposed set of rules for the auction, Google said it wants the FCC to require the winning bidder to offer to resell access to some of the airwaves to competitors on a wholesale basis.

"When Americans can use the software and handsets of their choice, over open and competitive networks, they win," Google Chief Executive Eric Schmidt said in a letter to Martin.

Martin's plan would require support for any wireless device or software application, but it did not include the so-called "wholesale" requirement.

"While these all are positive steps, unfortunately the current draft order falls short of including (all of the) tailored and enforceable conditions, with meaningful implementation deadlines, that consumer groups, other companies, and Google have sought," Schmidt wrote.

Google also called for another provision which would require other companies to be allowed to interconnect "at any technically feasible point" with the winning bidder's network.

Schmidt has said an open telecommunications network drives Internet usage and directly benefits Google's business strategy of selling advertising over the Internet. Some analysts have also speculated that Google could have plans to develop and sell mobile devices.

Google's position is at odds with existing major wireless carriers that say a requirement to resell the airwaves would reduce the value of the airwaves.

Google's offer was denounced by most existing wireless carriers, who accused the company of trying to rig the auction in its favor.

"This is an attempt to pressure the US government to turn the auction process on its head by ensuring only a few, if any, bidders will compete with Google," AT&T Senior Executive Vice President Jim Cicconi said in a statement.

AT&T is supporting Martin's proposed auction rules, while the No 2 wireless service provider, Verizon Wireless, has staunchly opposed any conditions on the auction as "corporate welfare" for Google. Verizon Wireless is owned by Verizon Communications Inc and Vodafone Group Plc.

Currently, wireless carriers restrict the models of cell phones that can be used on their networks and the software that can be downloaded onto them, such as ring tones, music or Web browser software.

Martin and the other four FCC commissioners are mulling different scenarios for how the auction should be conducted amid intense lobbying by existing wireless carriers, consumer groups and potential new bidders such as Google.

The airwaves to be sold in the 700-megahertz band are considered valuable because they can travel long distances and penetrate thick walls. The auction, to be held later this year, is seen as the last opportunity for a new player to enter the wireless market.

Later on Friday, a key House committee announced it had asked all five FCC commissioners to testify at an oversight hearing on Tuesday.

In a letter to the FCC, House Energy and Commerce Committee Chairman John Dingell asked a series of questions about how Martin's proposed open-access rules would be enforced and whether they would increase costs to wireless carriers and consumers.

Google and some consumer advocates have pushed for a list of open-access conditions for a large piece of the airwaves and argue that the wholesale requirement should be among them to promote more competition for wireless service.

A source familiar with Martin's auction plan said the minimum bid requirement was set at $4.6 billion. If no bidders met the minimum amount, the auction would be run without the open-access conditions.

Blair Levin, an analyst with Stifel Nicolaus, said Google's offer "is a way to take that (money) issue off the table."

"It certainly helps those who are supportive of Google's position to be able to say the treasury is going to make at least as much as the treasury thought it was going to make," Levin said.

Levin said he did not think there was enough support currently among the five FCC commissioners to pass the wholesale requirement sought by Google.
But, he said, "The odds have gone up." The 700-mHZ airwaves are being returned by broadcasters as they move from analog to digital signals early in 2009.

The move to bid on the wireless airwaves was overshadowed on Wall Street by disappointment over Google's second quarter results, issued last week, which were hurt by a costly hiring spree that saw its shares close Friday down 5.2 per cent to $520.12.

Reliance Communications Acquires US Based Yipes For $300 Million

Reliance Communications Limited today announced the signing of a definitive agreement to acquire US based Yipes Enterprises Services ("Yipes"), the leading provider of managed Ethernet services.

Accelerates Reliance Communications penetration into the lucrative Rs 400,000 crore ($ 100 bn) global enterprise data market Yipes is strongly positioned in Ethernet, by far the highest growth segment in the US datacom market, with an annual growth rate of over 30% Yipes has strategic network presence in the top 14 US metros, which account for 40% of the total US datacom market

Yipes has nearly 1,000 enterprise customers and provides mission critical communications platforms for entire industry communities. Reliance will rapidly expand Yipes coverage within the US and take Yipes to nearly 40 new markets globally where Reliance is already present in Middle East, Asia and India.

By synergizing FLAG and Yipes, Reliance is poised to become the global leader in Ethernet, a Rs 100,000 crore ($ 25 bn) market wordwide by 2010.

Anil D. Ambani, Chairman of Reliance Communications, said "This is the largest acquisition that Reliance Communications has ever made. The acquisition of Yipes drives forward our strategy to offer the most sophisticated, cutting edge data communication products and services, specialising in application and content distribution, spanning developed and emerging markets. We see enormous potential to rapidly expand Yipes coverage in the US and to globalise Yipes service by leveraging our customer relationships and network reach around the globe. We confidently expect this acquisition to significantly enhance the growth rate, profitability and returns of our global data business."

Highlights of Yipes business

Yipes is the leading provider of managed Ethernet and application delivery services for the global enterprise. Established in 1999, Yipes has pioneered Metro Ethernet and has developed leading edge proprietary products to meet the exacting requirements of its customers. Ethernet is the fastest growing segment of the data communications market, driven by the migration of enterprise customers from older private network technologies. Infonetics Research forecasts the Ethernet services market will surge by over 30% CAGR from 2006 to 2010 when it will top $ 25 billion worldwide.

Yipes has nearly 1,000 enterprise customers, concentrated across 4 industry verticals - financial, legal, government and healthcare - which currently account for 50% of the Ethernet market. Yipes has developed communications platforms that act as the oxygen for entire industry communities. For example, Yipes is the leading direct communications provider to the New York Stock Exchange, Chicago Mercantile Exchange and NASDAQ and interconnects with multiple market participants and intermediaries.

Yipes, headquartered in San Francisco, owns over 22,000 route kilometres of fibre across 14 US metros, which covers around 40% of the total US datacom market. In addition, Yipes is present in London, Hong Kong and Tokyo.

Pramod Haque, Yipes Chairman and Managing Partner of Norwest Venture Partners, said "We saw long ago the impact Ethernet services would have on the telecommunications industry. Yipes has consistently brought fresh ideas and tangible innovation to this market. This acquisition of Yipes by India's powerhouse, Reliance Communications, sets the stage for a major transformation within global telecommunications."

John Scanlon, CEO of Yipes, said "Yipes pioneered Metro Ethernet services, extended it across the US and is poised to expand globally. With Reliance Communications, we aim to replicate our success in the US across the rest of the world. The financial sector, in particular, presents a key opportunity for us as we are well positioned to capture the market by meeting the fast-growing and stringent connectivity requirements of financial exchanges around the world. The financial connectivity market alone is expected to reach $ 6.3 billion by 2010 and grow at around 35 percent per annum."

Strategic fit with Reliance Communications

Reliance Communications vision for its Global Data business is to be a leading provider of sophisticated, cutting-edge data communication products and services, specializing in application and content distribution, which will span into developed and emerging markets, delivered over the FLAG Global Network.

The acquisition of Yipes is a key step in Reliance Communications plan to move up the value chain and closer to its customers in the Global Data business. It significantly increases Reliance's revenues from the enterprise segment internationally.FLAG and Yipes are highly complimentary in terms of their products, services, and networks.

With the acquisition of Yipes, Reliance will accelerate its penetration into the lucrative Rs 400,000 crore ($ 100 billion) global enterprise data market and will be better able to serve its international customers directly in the US.With the backing of Reliance, Yipes will rapidly double its coverage of the US market. At the same time, Yipes Ethernet services will be overlaid on FLAG's global next generation network, allowing Yipes to expand its reach worldwide and enabling FLAG to create significantly more value from its network assets in the strongholds of India, the Middle East, and East Asia.

Reliance Communications, through an affiliate, is acquiring 100% of Yipes in an all-cash transaction. This constitutes Reliance Communications largest acquisition to date. Yipes will operate as a strategic business unit, fully integrated strategically and operationally within FLAG Telecom. The key senior management of Yipes has committed to remain with the business and will continue with their present responsibilities.

Punit Garg, President, Global Business, Reliance Communications commented "The acquisition of Yipes will place Reliance Communications among the top three Global Ethernet service providers in the world. Reliance Communications with FLAG has a strong foothold in India, the Middle East and Asia, including China, Hong Kong and Taiwan. We plan to leverage the significant headstart of Yipes in Ethernet services, double the coverage in the US domestic market, and rollout Yipes services over the FLAG Global Network. We are fully committed to bringing Ethernet services to nearly 40 new countries."

Persistent Systems on an ACQUISITION SPREE

After a long hibernation of acquiring ControlNet India, a 100% subsidiary of Campbell, CA based ControlNet Inc., for approximately US $ 2 Million (Rs. 9 crores)in the year 2005, Persistent Systems, a outsourced software product development services provider, today announced the acquisition of assets of the Indian arm of Metrikus Inc, USA. Through this acquisition, Persistent Systems and Metrikus Inc have entered into a revenue sharing agreement to jointly market business intelligence solutions.

All of Metrikus India's employees are now part of Persistent Systems family. The acquisition has enabled Persistent Systems to establish a foothold in Hyderabad.

Anand Deshpande, MD & CEO, Persistent Systems quoted: “This acquisition brings on board BI solutions expertise and a development centre in Hyderabad.”