Front office software consolidation in high gear

The business intelligence market rivaled its sister software space, customer relationship management, this week in the pace of consolidation. Global enterprise business intelligence software maker Business Objects agreed to buy Crystal Decisions, an information management software company, best known in telecom for its reporting capabilities, for approximately $820 million in cash and stock. In a separate transaction, Hyperion Software, a financial applications company jumped into the business intelligence arena by acquiring Brio for a little over $100 million.

Crystal Objects’ flagship product, Crystal Reports, has shipped over 14 million licenses and is distributed through 350 OEM relationships including those with Hyperion, Microsoft, PeopleSoft and SAP. Many network management solutions also use Crystal Reports’ report authoring tool.

The consolidation gives Business Objects, which has North American headquarters in San Jose, Calif., market leadership in the business intelligence market and significant new distribution channels. The combined company will have over 3800 employees, of which 500 will be in its sales force. It also will bring the number of alliance partners to 700 and the number of licenses to 16 million. The deal is expected to close in the fourth quarter of this year.

Under the terms of the agreement, Business Objects will issue approximately 26.5 million shares of common stock in respect of outstanding Crystal Decisions common shares and stock options, which will represent approximately 29 percent of the combined company¹s shares. In addition, Crystal Decisions stockholders will receive an aggregate of $300 million in cash.

Hyperion also is a global player, specializing in business performance management software. It counts among its telecom customers, BT, France Telecom, Korea Telecom and UTStarcom. Hyperion agreed to acquire business intelligence software provider Brio this week for approximately $142 million.

Under the terms of the agreement, Brio shareholders will receive a combination of 0.109 shares of Hyperion common stock and 36.3 cents in cash for each share of Brio common stock. Based on the closing price of Hyperion’s stock on July 22, 2003. Brio shareholders will own approximately 10.5% of Hyperion after the completion of the transaction. It is expected to close in the fourth calendar quarter.

Although Brio’s strength is in the enterprise space, the company’s product, Brio Reports is embedded into ADC Telecommunications’ customer management and billing solution in order to provide a suite of standard and ad-hoc reports. Siemens also uses the product internally. Brio has seen the extreme highs and lows of enterprise software vendors. It’s stock has been as high as $80 per share in 2000 and as low as $0.88 within the last year. It closed around $3.00 yesterday after reporting its first quarter results. Brio reported revenues of $24.8 million for the quarter that ended June 30, 2003, down slightly from the previous year and down 7% from last quarter. However, it did lessen its losses and increased its cash and cash equivalents by $997,000. Unimpressed, Business Objects president and chief operating officer said, “Hyperion buying Brio is like catching a falling anvil.” In addition to many European and other international carriers, Business Objects counts AT&T, BellSouth, LA Cellular, Nortel Networks and Sprint among its customers.