Sybase gambles on XcelleNet acquisition

Sybase is plunking down more than $95 million to bolster its position in the mobile platform space by acquiring device management vendor XcelleNet. An analyst says it's a risky move that could leave Sybase short on cash.

Sybase Inc. today announced it will acquire XcelleNet Inc., a maker of device management software for mobile databases and wireless devices.

The Dublin, Calif.-based database maker said XcelleNet will be rolled into iAnywhere Solutions Inc., Sybase's mobile middleware division. The acquisition is intended to bolster mobile data security and remote device management in Sybase's unwired enterprise products, the company said.

I think it was a good move for Sybase, although it is a risky move.
J. Paul Kirby
AMR Research

 Sybase will pay $95.2 million for XcelleNet, though that figure is subject to adjustment, based on changes between Dec. 31, 2003, and the date the transaction closes. Sybase said it expects the acquisition to close by the end of July.

J. Paul Kirby, a research director at Boston-based AMR Research, called the acquisition a gamble for Sybase. Unless Sybase liquidates non-cash assets to make the acquisition, Sybase will use 17% of its total cash assets to bolster an iAnywhere unit that only accounts for about 11% of Sybase's revenue, Kirby said.

"I think it was a good move for Sybase, although it is a risky move," Kirby said. "It's certainly a clear sign that Sybase wants to be known as a mobile platform provider."

For more information

Learn about Sybase's sophisticated mobile development tools.

Read how iAnywhere makes e-mails apps more Lotus friendly.

 Sybase could benefit from the additional customers that XcelleNet will provide, Kirby said. Sybase said it expects to gain 2,200 customers through the acquisition, as well as new and expanded relationships with partners and independent software vendors (ISVs), including Hewlett-Packard Co. and Microsoft.

As of the end of last year, Sybase held a 70% stake in the mobile database market, followed by IBM.

In February, iAnywhere launched its M-Business Anywhere Developer Edition, a platform that allows developers to make Web-based applications and content suitable for use on mobile devices with limited recoding. It also announced better integration capabilities for its SQL Anywhere Studio database development tools, which will enable developers to create more sophisticated, database-oriented applications.

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