ERG plays with the big boys

ERG this week concluded substantial wheeling and dealing by entering a deal to buy a stake in a German smart card specialist, and by forging an alliance with infrastructure services provider Downer Group.

In Germany ERG is negotiating to take a stake of about 10 per cent in card.etc, a smart card company created by Deutsche Telekom's subsidiary DeTeCardService. If the deal is completed ERG's chief executive Peter Fogarty will join the supervisory board of card.etc. A spokesman said card.etc has agreed to work exclusively with the ERG/Motorola alliance in bidding for the full transit project in Berlin, where the alliance recently completed a successful smart card trial.

On its home turf ERG has entered an alliance with ASX-listed company Downer Group, which will take operating control of ERG Connect in return for cash and shares. ERG Connect is the telecommunications infrastructure design and deployment arm of ERG. A spokesman said the move is timed to enable Downer and ERG to be in a strong position to compete for the Telstra Access Renewal contracts - valued at between $A2.5 billion and $A3 billion - which are now out to tender.

IBM's helping hand for ASPs

IBM has launched a program to help Australian independent software developers make the move to applications services providers by signing up and Cincom Systems. Big Blue's Service Provider Ready Centre in Sydney is the first of its kind in the southern hemisphere, a spokeswoman claimed.

The IBM program is designed to provide developers with the education, assessment, enablement, hosting and market launching assistance they need to transform their business and capitalise on the rapidly emerging ASP industry, the spokeswoman added. "The application providers that will succeed in the ASP market will be those that can most quickly and flexibly adapt every part of their business to a new model.

"At the SP Ready Centre the solution is tested and configured, given functional and load testing, including simulation of user workload and scalability stress testing".

Telco cashes in on assets

Listed company Telco Australia has raised almost $A10 million through the sale of its retail reseller business Adlink, and the offloading of a stake in the Chinese Internet content company.

Telco acquired 75 per cent of Adlink last August, and moved to full control in December. Under the terms of the $A1.5 million sale Adlink's management will acquire the company's retail mobile phone and long distance businesses together with the billing and customer care system. Telco will retain the company's Internet assets through its subsidiary GoGo Net, and will provide vendor finance to the purchasers for four years.

"Selling our retail business frees considerable management resources to focus on growing our global telephone business and to pursue more lucrative opportunities elsewhere," noted Telco's managing director Siegfried Konig.

Telco bought its way into with a 51 per cent stake last November. The deal cost $A2 million in cash and a further $A2 million in services. Telco has now sold a 7.5 per cent stake to US venture capitalist Decro Internet Technologies for $US5 million, valuing the portal at $US67million. is a Chinese Internet content provider that has relationships with Beijing Telecom and the National Library of China. A spokesman claimed it is the leading Chinese Web site in Australia.

Developer backed by Ericsson's program

Victorian Web developer Net Promotions has been accepted as a member of Ericsson's Mobile Internet Developer Zone program, which will give it access to a range of developer support tools and business opportunities.

Net Promotions launched its first WAP product - Ozwind WAP - in April. The product gives details of wind conditions and is intended for use primarily by sailors, balloonists and participants in other sports that are dependent on or influenced by the wind.

Business briefs

An agreement through which Melbourne IT's registrar subsidiary Internet Names WorldWide was to supply bulk domain names to has fallen through. A spokesman said Namezero had altered its business plan and was now seeking a registrar that would fund the provision of free domain names. "This role is not in line with INWW's business approach," the spokesman added.

GlobalBusiness Solutions has agreed to buy a 55 per cent stake in the Topaz CRM software developed by Spectrum Information Services. "CRM is an online search engine for marketing executives of corporates. After customising by Global it will provide tools to facilitate conversion to online e-business," explained Barry Wong, chief executive of Global. Christine Beard and Peter Brown of Spectrum will act as consultants to Global.

Australian Exhibition Services, the company that built Australia's annual PC shows into a big business, has been bought by US company Diversified Business Communications. The company will not change its name after the takeover, according to managing director Graeme Selby.

Briefs from abroad

The proposed $US120 billion merger of WorldCom and Sprint is dead in the water after it was formally opposed by regulators in the US and Europe. The news prompted a quick reaction from Deutsche Telekom, which mounted a $US100 billion bid of its own for Sprint. Comments were not forthcoming from either of the companies.

Dell Computer has set up a wireless business unit to exploit the perceived potential of the global market for wireless Internet access. The new unit will be headed by a former Motorola executive Moe Grzelakowski. She will report to the office of the CEO.

Texas Instruments has agreed to buy US CDMA company Dot Wireless for $US450 million in order to gain broader reach into multiple wireless standards.

Like the legendary phoenix, Stratus Computer has returned to the real world by forging a licensing deal with NEC and planning a name change. The deal with NEC is part of a new strategy under which the company will license its intellectual property as well as supply fault-tolerant servers, a spokesman claimed. The company's new name will be Stratus Technologies.

French company Groupe Bull has spun off its network management software arm - Bullsoft - as a software subsidiary known as Evidian. The new operation has 400 employees, three established product lines and revenue of $US60 million.. "We are being born today at 60-to-70 kilograms weight," a spokesman quipped.

Corporate Quarters

Unisys has warned investors that its second quarter revenue and profit will be below expectations, with revenue slipping 15 per cent from the previous second quarter to about $US1.6 billion and profit being less than half of the result of a year ago. The poor outcome was attributed to a range of factors, such as weakness in Unisys' federal government businesses, unfavorable exchange rates, and deferral of several large contracts.

3Com lost $US146.8 million on revenue of $US764 million in its fourth quarter to June 2. A year ago the company had made a net profit of $US87.5 million on revenue of $US1.23 billion. Earlier in the year 3Com initiated a sweeping restructuring plan, under which it will quit the analog modem and high-end LAN and WAN markets, although the latest results included some revenue from those business areas.

In its first quarter to June 3 Cabletron Systems lost $US3.7 million on revenue of $US275.1 million. The results did not compare favourably with the previous first quarter when the company made a net profit of $US7.3 million on revenue of $US349.5 million. Cabletron too is undergoing a reorganisation which will split it into four operating companies. It expects to arrange IPOs for two of the four before the end of the year.

Palm Inc lifted net profit from $US6.8 million to $US16.3 million in its fourth quarter to June 2. Revenue jumped from $US174.3 million to $US350.2 million. The profit excluded costs involved in its split from 3Com, which dragged net profit down to $US12.4 million. During the quarter the company shipped more than 1.1 million handheld devices.

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