After helping to define and create a market for corporate portal software, San Francisco-based Plumtree Software has been swallowed up by infrastructure giant BEA Systems. Plumtree was the last of the original portal pure-plays left in the market and its demise now puts a final nail in the coffin of an independent market for portal software.
San Jose, California-based BEA will pay $200 million in cash for Plumtree. The price equates to $5.50 a share – which is a 13% premium over Plumtree’s Monday closing price of $4.86 a share. BEA will also assume Plumtree’s outstanding options.
The news however did send Plumtree’s stock northwards in after-hours trading. Plumtree shares leapt 11% to $5.40. BEA’s shares held par with $8.89. The deal is expected to close in the autumn of 2005.
Plumtree, which has around 400 employees, will become part of a new BEA business unit whose name has yet to be determined. BEA also picks up about 700 corporate Plumtree customers, representing a user base of 21 million users worldwide.
BEA will use Plumtree’s technology to expand its offerings in the enterprise business software space.
The acquisition not only marks the end of the road for Plumtree, which pioneered portal software that connects workgroups, computer systems and processes back in 1996. It also marks the end of a wave of portalmania hype that started in 2000 – fueled in no small part by an over-optimistic report published in 1998 by Merrill Lynch which forecast a multi-billion dollar market.
At its peak, the portal market which was once awash with around 30 portal start-ups and also drew in larger IT players like Sybase, SAP, Oracle and Hummingbird.
Sybase and Hummingbird even took the bold step of reinventing themselves as portal companies. Both later made u-turns after recognizing that portal technology should be included as part of infrastructure – specifically application servers that act as a glue for sticking together different software programs in order to work with one another.
Indeed many industry pundits observed that this was the right place for portals to reside. In this respect BEA, as a leading application server, is not an unlikely buyer.
Plumtree was a small company that certainly did not lack ambition. Despite its size and modest revenue, Plumtree surprised the market with an early IPO in June 2002, raising a modest $42.5 million. However it then had to sit back and watch while most of its independent peers – including Epicentric and Corechange – were acquired by larger vendors.
It soon became clear that a market for standalone portals did not exist. Plumtree nevertheless persisted and suddenly found itself as the sole remaining portal pure play left in the market.
Despite tweaking its product strategy towards syndicated portal services, the enterprise web, activity management and more recently composite applications development, Plumtree has struggled to sustain any real momentum and growth in the market.
The company reported sales of $84.1 million last year. But its recent performance has been dismal – the company reported a loss of $2.2 million against revenue that fell 15% to $21 million for its second quarter. It also announced it was starting a probe of its internal accounting controls.
BEA’s business is however far healthier. It reported net income of $131.1 million against sales of $1.08 billion last year.