IT Weekly Middle East Newsletter 17th July 2005

This month saw security firm Symantec formally complete its capture of Veritas Software. The US$13.5 billion deal, which was wrapped up once Americans had finished their Fourth of July celebrations, was inevitable once shareholders at both companies had given their approval, which they did in June.

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By  Peter Branton Published  July 17, 2005

IT industry's urge to merge|~||~||~|This month saw security firm Symantec formally complete its capture of Veritas Software. The US$13.5 billion deal, which was wrapped up once Americans had finished their Fourth of July celebrations, was inevitable once shareholders at both companies had given their approval, which they did in June. After the Symantec shareholder meeting had closed, CEO John Thompson told reporters that “We’re like a dog that’s chasing a car. Now that we’ve caught it, people ask ‘What do you do with it?’” The question applies equally to all mergers. The repercussions of Hewlett-Packard’s 2001 wooing of rival Compaq can still be felt today: Carly Fiorina, the CEO who greenlighted the deal, got the chop earlier this year (see IT Weekly 12- 18 February) as results never matched expectations. Larry Ellison, CEO of Oracle, will probably feel his job is safe — he founded the company after all — but the jury is still very much out on the database giant’s capture of PeopleSoft late last year. While the intention was to bolster application sales and boost market share against arch-rival SAP, early indications are that the German software giant is gaining, not losing market share. This uncertainty doesn’t seem to have put other companies off from making mergers and acquisitions. As well as the two mega-deals mentioned above, Sun Microsystems has recently declared it is buying storage firm StorageTek for US $4.1billion (see IT Weekly, 11-17 June 2005). Dwarfing all these deals, rumour has it that networking giant Cisco is looking to buy storage firm EMC for a staggering US$43 billion. It is hard to say at the moment what truth there is in this last story. We are, after all, in what we journalists like to call ‘the silly season’: those summer months where real news is in short supply and speculation is the order of the day. By the time you get to read this copy of IT Weekly the story may have died a death, been outright denied — or maybe even it will have been confirmed. Since we can’t add anything more to the story here, we will leave it for now, but it shows the willingness for people to believe that such big-money mergers is still definitely there. It is that willingness that really counts. The arguments for Symantec merging with Veritas were well laid out by both companies: security means more than just protecting your data against viruses, it is about availability as well, and so on. But what eventually swung the shareholders was the belief that the combined company would be able to execute on those plans. To be fair, Symantec has seen its shares lose their lustre, with big investors sceptical that merging a firm which operates in a high-growth market — security — with one in a mature market — storage — was a good idea. Now those investors are waiting to see what will happen with the car: what will they do with it? Thompson has predicted that the bulk of the ‘heavy lifting’ will be done in the next six months: the successful implementation of integration plans in this period will be crucial to the success or failure of the merger. Symantec executives are confident that these integration plans are solid, with up to 100 people having been assigned to work on them since the beginning of this year. Such confident predictions sound all-too familiar however: similar noises have been made in other big mergers. HP for instance, boasted of its “clean room” where all procedures were thrashed out before the merger was completed. We wish Symantec and Veritas executives the best of luck with the merger. The question now is: are we at the beginning of the end or the end of the beginning?||**||

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