SPRINTING INTO INTEGRATION
In a $425 million cash deal, Kansas City, Mo.-based Sprint Corp. announced that it will acquire Houston-based Paranet Inc., an integration, management and support services provider for distributed computing technology.
The agreement marks Sprint's intention to enter all aspects of the data market, including the desktop.
The new business unit will be called "Sprint Paranet,'' and will allow more companies to outsource all or part of the design, implementation and management of computing infrastructure.
Nearly half of all businesses outsource some or all of network and system management needs, company officials say, and the market is expected to grow to $43 billion by the year 2000.
Founded in 1991, Paranet serves 250 customers, including major corporations such as Palo Alto, Calif.-based Hewlett-Packard Co., Schaumburg, Ill.-based Motorola Inc. and Dallas-based Texas Instruments Inc.
It posted $66 million in revenue for 1996. Sprint, a global telecommunications company, most recently reported $14 billion in annual revenues from 16 million business and residential customers.
The acquisition is expected to take about 30 to 45 days to close, hinging upon Securities and Exchange Commission approval after a public comment period. The boards of both companies have already approved the transaction.
GOVERNMENT COMPETITION? CALL US
Company executives who feel they are facing competition from the government for work can report concerns to a hotline established by the Professional Services Council, a Vienna, Va.-based group that represents service contractors.
The Electronic Industries Association and the Information Technology Association of America, both of Arlington, Va., are also helping to run the hotline. Call (703) 883-2030, or write to firstname.lastname@example.org. The trade associations want to collect information for a database of cases of government vs. private sector competition. The information also will be used to illustrate the extent of the problem and its implications, the Professional Services Council said.
INFOTECH ON A BUYING SPREE
Mergers and acquisitions among information technology companies are on a record-breaking pace through the first half of 1997, according to a study by Broadview Associates, a merger and acquisition consulting firm in Fort Lee, N.J. Through June 30, there were 1,177 mergers and acquisitions compared to 980 for the first six months in 1996, a 20 percent increase.
STONINGTON EYES MERISEL ACQUISITION
El Segundo, Calif.-based Merisel Inc. is considering a proposal from New York-based Stonington Partners Inc. to acquire 70 percent of the company's common stock with a $152 million investment that would eliminate most of the existing company's North American-related operating debt.
The cash investment would eliminate about $150 million in debt held by Merisel Americas Inc., the Merisel subsidiary that operates the company's North American distribution businesses. The offer will be kept available until Sept. 4.
In prepared statements, Dwight A. Steffensen, Merisel chairman and CEO, said proceeds of the offer would allow the company to address that debt while allowing shareholders to retain a greater equity interest than under a current restructuring plan.
In the proposal, current stockholders retain 30 percent of then outstanding common stock. The proposal could also provide financial arrangements to allow Merisel to boost its working capital availability.
The offer is pending upon a final agreement between Merisel and Stonington's $1 billion equity fund managers and shareholder approval. The deal also depends upon the termination or modification of a debt that amounts to $125 million in Senior Notes that would not be covered by the $152 million Stonington investment.
Merisel Inc. distributes more than 25,000 products to about 45,000 resellers in the United States and Canada.
BDM REPORTS LOWER EARNINGS
As expected, BDM International Inc., McLean, Va., reported its 1997 second quarter earnings were lower than those in the same quarter last year.
The drop was blamed on problems surrounding a state contract, a federal hardware purchase that was delayed, and an unfavorable exchange rate for BDM's German subsidiary.
Despite problems with the state contract, BDM saw its revenues from state and local governments grow 25 percent in the first quarter and 10 percent in the second. Meanwhile, revenues from the federal government fell 16 percent in the first quarter and 4 percent in the second. Overall, BDM's revenues are up 10 percent for the first six months of the year. The company brought in $523.4 million through June 30, compared to $477 million for the first two quarters of 1996. Net income dropped from $12 million for the first half of 1996 to $11.3 million in 1997.
NORTEL DOES NETWORK DEAL
Nortel, San Ramone, Calif., has joined a public/private partnership involving a local phone carrier and the city of Anaheim, Calif., to build a telecommunications network for the city.
The network will initially connect Anaheim's government and major commercial districts via a high-speed fiber optic loop for voice, video and data services. SpectraNet International, San Diego, will lease 60 fibers from the city's existing 50-mile fiber optic backbone system.
In turn, the city will receive a percentage of the network's gross and net revenues over the life of the lease. Nortel will provide networking switching, remote access and consulting services as part of the $11 million deal.
FORMER HUGHES EXEC JOINS ADI
Wayne Shelton, recently retired president and chief executive of Hughes Information Systems Co., Reston, Va., has been appointed to the board of directors of ADI Technology Corp., Alexandria, Va. ADI specializes in information, engineering, environmental and management technology.
PULSAR FOUNDER FEATURED IN FORTUNE
The cover of the Aug. 4 issue of Fortune magazine features William W. Davis, president and chief executive of Pulsar Data Systems, a Lanham, Md.-based systems integration company. He is one of 13 people on the cover for a story on the new generation of black business leaders.
WAR BY OTHER MEANS
Public protests and barrages of electronic mail have prompted one online provider to cut off a Web page operated by a Basque political organization that promotes the use of violence to achieve independence for the Basque region of Spain.
The protests followed the recent murder of a Spanish politician, and included "organized, malicious [electronic] attacks designed not to communicate with anyone, but simply to make [the provider's] computers unusable. ... It's like vandalizing a bookstore to protest a book," said a statement from the Institute for Global Communications, a San Francisco-based Internet provider with 13,000 subscribers.
SMALL FIRMS HIT HARD BY BUNDLING
Federal contract "bundling" has helped cut the flow of contracts to small businesses by 44 percent over the last four years, according to a study by the Office of Advocacy at the Washington-based Small Business Administration. Contract bundling saves the federal government money by combining many small contracts into a few large contracts, but has attracted sharp criticism from small-business advocates, who say they are being elbowed out of the federal sector by large corporations.
How Much Hacking Is Going On?
Reported Firewall Breaches
|Past 3 Months ||Past 12 Months ||Past 24 Months |
|Denial of Service ||8% ||10% ||8% |
|Mail Bombs ||10% ||12% ||11% |
|IP Spoof ||23% ||20% ||18% |
|Sendmail Port Scans ||8% ||7% ||7% |
|Other Breaches ||7% ||8% ||10% |
| ||Source: National Computer Security Association |
Malicious hacker attacks are the same as or worse than last year, report three-quarters of 61 large companies polled by the National Computer Security Association, Carlisle, Pa. When attacks happen, they are often very expensive, especially when they penetrate defensive firewalls, reported the companies, which have an average of 2,452 PCs, 331 Internet servers and 9 World Wide Web servers each.
The chart above shows how many companies' software defenses were overcome by hacker attacks intended to deny them computer services, such as by overloading computers' processing power with irrelevant data. Some companies were also hit by a mail bomb attack, where the victim company's Internet servers are overwhelmed by bogus messages.
The chart also shows the percentage of companies that were hit by hackers masquerading as trusted employees or allies (IP Spoof) or who use a widespread fault in UNIX software (Sendmail Port Scans) to penetrate a company's defenses.