Computer Associates International Inc is carrying out its plan to become a major player in the lucrative services industry. CA has announced it will acquire Realogic Inc, a privately-held technology consulting firm based in Cleveland, Ohio. Financial terms were undisclosed. The move comes as part of CA’s plan B overall growth strategy for its Global […]
Computer Associates International Inc is carrying out its plan to become a major player in the lucrative services industry. CA has announced it will acquire Realogic Inc, a privately-held technology consulting firm based in Cleveland, Ohio. Financial terms were undisclosed. The move comes as part of CA’s plan B overall growth strategy for its Global Professional Services business which took shape following the company’s failed bid to acquire Computer Sciences Corp in March for nearly $10bn. Since then, CA has been building its GPS business with a two-pronged approach – both through internal hiring and through the acquisition of smaller companies with complementary offerings and an international presence. Along those lines, Realogic brings a presence in London, Sydney and Madrid as well as some core competencies which CA’s service unit was lacking. Implementation expertise in the areas of workgroups systems, wireless communications, packaged applications and e-commerce should help to round out the GPS portfolio. The fact that Realogic is by no means a Unicenter-focused shop – it admits to virtually no experience with the platform and no previous relationship with CA – also helps, as CA is looking to build its independent services business around any and all platforms and thus far has seen the lion’s share of its business focused on Unicenter. Five-year-old Realogic has roughly 350 staff and boasts annual revenue of $42m, with historical growth rates of between 65% and 70% year-over- year. Its customers are Fortune 1000 companies and include the likes of AT&T, 3Com, Visa International, Kraft, Goodyear and Pacific Bell. President and CEO David Snyder said the company had always been marginally profitable and had managed to survive with virtually no funding. It was well on the road to an initial public offering a couple of months ago, although Snyder admitted he was not infatuated with the process, but needed the money to fuel growth. At that time, the company was approached by a number of suitors – somewhere between five and 10 – and felt that CA was the best fit. Snyder said he was drawn in by the apparent seriousness and level of commitment to services CA showed, as well as the fact that it professes to be technology agnostic. Chris Wagner, executive vice president for CA’s GPS, insists that it is intent on being a well-rounded, global, platform- independent services concern. Wagner said, however, that CA’s product line and marketing machine would undoubtedly provide certain leverage for the company in the services arena, which he won’t hesitate to use when it makes sense to do so. It took about sixty days to hammer out the acquisition, which will see Realogic operate as a wholly-owned subsidiary until the end of the calendar year, in which time details will be worked out on the full integration of the two entities. Looking ahead, CA promises more acquisitions this year as it continues to build its GPS business as rapidly as possible. It is presently involved in the due diligence process with a number of potential targets. Wagner said that CA chief executive Charles Wang has basically given him instructions to take the unit to $1bn in revenues as fast as he can. The goal is to eventually see services providing 30% of CA’s overall revenue. Snyder would not admit to any timetable to reach those goals and would also not offer any information on where the 1,000-person services business stands now in terms of revenue. Shares of Computer Associates climbed $2 on Wednesday to close at $33.625.