TRW Touts Synergies
TRW Touts Synergies
The combination of TRW Inc. and BDM International Inc. has bestowed both contractual blessings and physical changes, according to top company officials.
In January, the combined company's systems integration unit will move from its Fairfax, Va., headquarters to a new building in Reston, Va., said Philip Odeen, executive vice president and general manager of TRW's Systems & Information Technology Group. It's the fastest-growing unit in the company, which should hit $12 billion in sales for 1998.
The defense and intelligence business, which generates 60 percent of the group's $3 billion in annual revenue, will stay in Fairfax, said Odeen, the former president of BDM who helped orchestrate the $1 billion deal last December.
Synergies from the deal include cost savings from combining back-office operations, more "feet on the street" to market large task-order contracts and added capabilities, Odeen said.
Those extras helped TRW win the Defense Travel System contract, which sources estimate could be worth $264 million over eight years. The effort to build a paperless travel requisition system for the Defense Department "is a very high visibility defense reform initiative," Odeen said.
The company's state and local business has also gotten a shot in the arm. That segment is experiencing double-digit growth from winning projects in areas such as welfare, health reporting and law enforcement. Recent wins include a $272 million, five-year contract with Ohio to build a statewide radio system.
? Nick WakemanVanstar To Gain Market Clout
Vanstar Corp.'s planned merger with giant computer reseller InaCom Corp. will help strengthen Vanstar's position in the federal market, company officials said.
The future of the company's operations were good before the merger, but "I'm even more optimistic and bullish after the merger because of the increased resources," said Carleton Jones, president of Vanstar Government Systems Inc., a subsidiary of Atlanta-based Vanstar Corp.
The merger will create a reseller and services company with 12,000 employees and $7 billion in annual revenue. Fairfax, Va.-based Vanstar Government has 120 employees and generated about $160 million in revenue last year from systems integration and computer reselling, one analyst said. InaCom of Omaha, Neb., does not sell to the federal government.
InaCom is offering Vanstar shareholders 0.64 shares of stock for every share of Vanstar. The deal, worth $480 million when it was announced Oct. 9, is expected to close by early next year.
Send Him an Angel
Clifton Bumgardner, formerly senior vice president and chief technology officer of BTG Inc., Fairfax, Va., is looking to raise about $250,000 in angel financing to market his new electronic commerce company.
Electronic Business Inc. of McLean, Va., will begin as a systems integrator helping commercial and government customers implement electronic commerce solutions. Bumgardner expects the federal government to account for 25 percent of the company's revenues; the primary market will be the commercial sector.
R&D Tax Credit Renewed ...
Software and computer hardware manufacturers breathed a sigh of relief after the research and development tax credit was included in the Omnibus Budget Bill hammered out by members of Congress and the White House.
Information technology officials feared that innovation and new product development might be slowed without the provision, which enjoyed wide industry support.
"New products drive sales for distributions, resellers, [value-added resellers] and everyone else," said Bruce Hahn, director for public policy at the Computer Technology Industry Association, which has about 7,200 members including manufacturers, resellers, distributors and training companies. "The folks downstream benefit as much as the manufacturers and software developers."
The tax credit was extended through Sept. 30, 1999, so industry officials will have to fight the same battle next year.
... Other Legislative Victories
The Omnibus Budget Bill included several other provisions dear to IT companies. Among them were one that increases the number of visas available annually for foreign high-tech workers from 65,000 in 1998 to 115,000 in 1999.
The bill also included a three-year moratorium on new Internet taxes from state and local governments. Barred are taxes on Internet access fees. Sales taxes can continue, but only if they are levied the same way taxes on mail orders are imposed.
In addition, President Clinton signed into law a bill limiting the liability of companies that disclose information on year 2000 software repairs. The Information Technology Association of America, which represents IT services and product companies, applauded Clinton's action. Information sharing is "critical to expediting the pursuit of year 2000 remediation programs," ITAA said.
Encryption Export Cleared
The Commerce Department this week approved the export of encryption products that include a "private doorbell" provision for law enforcement officials.
The doorbell approach allows information to remain secure and private unless a network operator is served with a warrant or court order to give access to law enforcement officials.
An industry group including 3Com, Ascend Communications, Cisco Systems, Hewlett-Packard, Network Associates, Nortel, Novell and Sun Microsystems pushed for the Commerce Department approval.
Deltek Postpones Stock Offer
Deltek Systems Inc. has pulled the plug on a stock offering that would have meant selling its shares at a huge discount.
In August, the McLean, Va., enterprise software and consulting company planned to sell 3.4 million shares of stock in a secondary public offering. In September, the software maker decided it would sell just 2.1 million shares, the majority of which were owned by company Chairman Donald deLaski and President Kenneth deLaski.
This week, the company canceled those plans because of the volatile stock market. Deltek stock closed Oct. 19 at $15.12, down 67 percent from its 52-week high of $25.25.