Norwegian IT services provider EDB Business Partner ASA has announced two significant deals with IBM, which sees it acquiring part of Big Blue’s Danish business, as well as announcing a return to profit in the third quarter and first nine months of 2004.
First, EDB is paying NOK 468 million ($71 million) to buy IBM’s local government and medium-size sector outsourcing business, as well as IBM’s Infobank, EDI services, and an operations centre at Hamar and IBM’s ownership interest in Kommunedata AL.
In total this business has an annual turnover of approximately NOK 500 million ($76.6 million) according to EDB, and provides services for some 300 municipalities and major public agencies as well as for 45 of IBM’s customers in the distribution and industry sectors. The deal will involve approximately 265 employees transferring to EDB.
Acquiring this business from IBM represents a three-fold increase in our turnover from the public sector, and makes EDB a fully fledged supplier to this market segment, said Endre Rangnes, CEO of EDB in a statement from the company. For their part, IBM claims that the sale is part of its strategy to consolidate global operations into fewer and larger units: IBM will continue to offer outsourcing on a case-by-case basis to the major companies and organizations on which we now focus, including Norwegian customers, said Jens Munch-Hansen, Managing Director of IBM Nordic.
At the same time, EDB and its most prominent client, Norwegian telecoms company Telenor, announced that they had chosen IBM as the main supplier of hardware, software and associated installation and maintenance services under their NOK 4.5 billion ($689 million) seven year infrastructure management and outsourcing deal first announced in March 2004. EDB has committed to purchase NOK 1.7 billion ($260 million) of hardware and software from IBM over the next five years under the deal, while Telenor says it will spend a further NOK 300 million ($46 million) over the same period.
EDB spokesperson Reidar Gjaerum told ComputerWire that the decision to use IBM was made jointly by EDB and Telenor, and that EDB would still retain the high-end services part of the deal. IBM would only supply installation and maintenance services. EDB currently runs 3,600 of Telenor’s 8,000 servers, and 15,000 PCs under the deal.
The company also had some good news to report in its third quarter financial statement. Continuing from its upbeat second quarter results – which saw a return to profitability before tax – EDB has now reported post tax profit levels for its third quarter and first nine months of 2004. The company reported profit after tax had reached NOK 33 million ($5 million) in the third quarter and NOK 291 million ($44.6 million) in the first nine months ended September 30, 2004, on revenue that grew less than 1% to NOK 1 billion ($15 million) for the third quarter and fell 2.4% to NOK 3 billion ($46 million) over the nine month period.