Borland’s Interim CEO Steps Up Acquisition Hunt

Borland Software’s interim CEO, Scott Arnold, told me in an interview last week that one of his first priorities has been to step up the company’s search for suitable acquisition targets to flesh out its Software Delivery Optimization (SDO) portfolio.

Arnold, formerly Borland’s COO, took the reins on an interim basis after the former CEO Dale Fuller stepped down on the announcement of a profit warning and missed expectations in July. However Arnold told me he has been told by the board that he is currently their leading candidate to become the permanent CEO. A decision is expected "soon". [Image: Scott Arnold, Borland interim CEO.]Sarnold

Arnold joined Borland in November 2003, having come from McKinsey & Company where he is said to have helped to found and grow the organization’s Silicon Valley office and global high tech and telecom practices. He was at McKinsey & Co for over 15 years.

Arnold said his first priority as the head of the application lifecycle management, middleware and development tools company has been to manage the transition from Fuller’s leadership to his own, while at the same time asking his chief marketing officer, Rick Jackson, to effect the communication of that strategy both internally as well as with the company’s key customers and partners.

But just as quickly, Arnold said he has set about, "Much more aggressively pursuing M&A activity than before, with the goal being to push faster to SDO [Software Delivery Optimization] from ALM [application lifecycle management]."

Borland is no stranger to acquisitions. In January this year it acquired the application development process consultancy TeraQuest Metrics, while a string of acquisitions in 2002 included the buyouts of TogetherSoft (which had itself bought WebGain) for $185m, as well as Starbase and BoldSoft. 

Arnold said that the most likely acquisitions going forward are buys "a la TeraQuest", suggesting that either companies with expertise in improving the application development process, or enabling its improvement through the use of ALM tools, are the most likely candidates.

As for the recent call by Robert Coates – a former director and long-term shareholder who has argued that Borland should spin off its middleware and development tools businesses to concentrate on ALM – Arnold stated: "There is nothing that Coates has said that we have not thought of ourselves, or that is anything new. We are happy to hear good ideas from wherever they come, but we haven’t heard a specific plan from Coates yet."

Arnold said that since both the tools business and middleware lines are profitable, they help to fund research and development in the faster-growing ALM and SDO spaces. However he noted that if the company received an offer for either of those businesses, he and the board would be obliged to consider them in line with their usual fiduciary duties and responsibilities.

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