Bajaj's DigitalNet banking on wireless, mobile computing

Ken Bajaj is hoping lightning strikes again as he launches his third information technology company.

Bajaj, chief executive officer of DigitalNet Inc., took his first company, I-Net, from a $5 million a year in 1985 to $300 million a year before selling it to Wang in 1996.

He started AppNet in November 1997 and built a $265 million annual revenue company before selling it to CommerceOne for $2.2 billion in June 2000.

Now, he's on the verge of closing a $223 million deal to buy Getronics Government Solutions Inc., whose parent company, Getronics NV, acquired Wang in 2000. Consequently, the acquisition will reunite Bajaj with many former I-Net executives.

Each of his companies has exploited a shift in technology and DigitalNet will be no different, Bajaj said.

I-Net's niche was the shift from mainframe computing to the client/server environment. AppNet exploited the building of the Internet infrastructure, he said.

With DigitalNet, Bajaj is banking that wireless and mobile computing is the next big thing, he said.

"The wireless market hasn't developed as quickly as we thought, but it will," he said.

As agencies and other organizations begin using more wireless devices such as personal digital assistants, Blackberry communication devices and mobile and handheld computers, the wireless infrastructure will grow and the need will grow to integrate the Internet infrastructure with the wireless infrastructure, he said.

When that happens, DigitalNet will be in a position to capture that business, Bajaj said. "The next frontier is network computing."

GTRC of Chicago is bankrolling DigitalNet to the tune of $100 million. GTRC also provided Bajaj $47 million to start AppNet and 18 months later received a return of $700 million, Bajaj said.

The plan with DigitalNet is to use Getronics Government Systems as its government platform and conduct a public stock offering in the next year. The business has more than $300 million in annual revenue and 14 percent earnings before interest, taxes, depreciation and amoritization. Bajaj said that the unit's EBITDA are among the highest in the government space.

Bajaj said the Getronics unit has annual revenue growth of about 6 percent to 7 percent and he wants to increase it to 10 percent.

The Getronics purchase brings capabilities in designing and implementing networks, web-based application development, security and information assurance and network management and operations. About 41 percent of the customers are with the Department of Defense, 12 percent with intelligence agencies and 47 percent are with civilian agencies, particularly the Justice and Treasury departments.

The only capability missing is strategic consulting, Bajaj said, "and we plan to grow that ourselves."

DigitalNet likely will not be doing more acquisitions until after the company's initial public offering and then it will be to acquire a platform for growing the business in the commercial market, he said.

Ultimately, he wants DigitalNet to bring in 40 percent of its revenue from the government, 40 percent from U.S. commercial customers and 20 percent from international markets, he said.

About the Author

Nick Wakeman is the editor-in-chief of Washington Technology. Follow him on Twitter: @nick_wakeman.

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