Micro Focus is in preliminary discussions to acquire both a European and a US-based services provider by mid-year, to ensure its business keeps growing after Year 2000 work dries up.
The Cobol compiler supplier hit bad times a couple of years ago when mainframe sales began to stagnate, but has pulled itself round this financial year (see earlier story) with the help of a boom in its Year 2000 products. These analyse where Cobol applications need to be modified to cope with the date change.
Martin Waters, Micro Focus? president and chief executive, said: ?Once the Year 2000 is behind us, all organisations are going to face the major issue of needing to figure out how to move to new technology such as the Internet and client/server. They?ll need products and consulting to migrate their applications.
Therefore, he said, services was the key area for Micro Focus to move into. "Services make up 10 per cent of our revenues now and are growing fast, but we will make acquisitions in the services and consulting space. We need the critical mass if we want to offer services, which we see as increasingly important to sell software.?
He added that he expected to purchase a medium-sized company with about a third of Micro Focus? $167.3 million turnover in the first half of this year, and is in preliminary discussions with two players, one in the US and one in Europe, at the moment. Ideally the company would make acquisitions in both territories.
The aim is for services to generate between one-third and one-half of the firm?s revenues in the next couple of years, but unlike Computer Associates, Waters said he would not consider a hostile takeover.
To further boost sales, Micro Focus also intends to introduce products to help users cope with European Monetary Union (EMU) conversion in the first half of this year. These testing tools will enable users to identify areas in their financial packages that need to be altered to deal with EMU.
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