Acquisition heralds a new Stone age

Stone Group Asia Pacific Investments is preparing to transform into an application service provider with the proposed acquisition of Sydney-based ecommerce company Customers.com (www.customers.com.au).

Previously a hardware-based thin client company, Stone Group is planning to acquire Customers.com for $1.2 million in stock, Julian Ludowici, Stone's managing director, said.

Customers.com was valued by analysts at between $12.5 million and $18 million, according to Ludowici. He said the acquisition, which includes staff, business relationships and trademarks, will be considered by shareholders at a meeting to be held on March 20. It is expected to gain shareholder approval, he said.

Ludowici said the shift into the ASP market follows a decline in Stone's traditional hardware-based thin client market. "The thin client hardware model has not been cost competitive. The whole circuit-based model has not been that successful for the company," he said.

According to Ludowici, the Customers.com solution will provide an ASP model for Stone, where frontend applications are rented to customers. Focusing initially on ecommerce applications, Ludowici said Stone intends on acquiring other applications such as document publishing, CRM and reporting tools. "We're examining a number of frontend applications to use with the (Customers.com) ASP model," he said.

Stone's ASP services will be targeted at medium-sized businesses with revenue between $30 million and $200 million. "Businesses with lower than $30 million (in revenues) won't have sophisticated ERP applications that require high-end servers, while businesses with more than $200 million can usually afford their own IT departments to run solutions inhouse," Ludowici said.

He expects a prototype model of the integrated companies to be determined by the end of the month with services and products commercially available by the end of the second quarter.

Stone's sales by the end of the year are expected to increase to between $2.5 million and $3 million as a result of the Customers.com purchase, Ludowici said.

The company recorded sales for the year ending December 31 of $568,000, he said.

Sydney-based Customers.com bears no relation to Boston-based Customers.com which is affiliated with the Patty Seybold Group.

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