Daily Archives: July 28, 2009

Looking Back at Liberate Technologies

One of the most popular posts on this site is “The Strange Story of Liberate Technologies.” It was written on September 28, 2006, and it attracted two cryptic comments. Lots of people have read it.

I am mystified as to why it has enjoyed such enduring appeal. I don’t think the only readers are former employees of the company, though some undoubtedly were, as those enigmatic comments attest.

Perhaps the story of Liberate, though strange, is the story of many technology companies in the post-2000 era of diminished expectations.

Once high-flying startups pumped up on seemingly limitless venture-capital funding eventually met hard times, investor demands for revenue and profit, and an IPO market that melted faster than an ice cube in a hot tub. Carnage resulted. Hopes were dashed, dreams died, jobs were lost, companies were liquidated or sold for a song.

Liberate wasn’t the only technology concern to meet an untimely and ignominious end, though it almost certainly was practically alone in attempting to reanimate itself as a trucking company.

Catching Up: F5 Beats the Street — Again

I suspect that F5 Networks continues to take away market share from its rivals in application-traffic management, so it’s probably not advisable to assume that the company’s encouraging third-quarter results, announced last week, are harbingers of better and brighter days for enterprise-related IT spending.

Still, it is a positive development, especially for F5 and its shareholders.

I’ve always admired the way the company operates. It’s one of the few networking firms that took on Cisco in a significant market segment and more than held its own in the battle.

All through the load-balancing wars of the Internet era, and then again into the current period where the market identifiers and nomenclature have changed (application-traffic management begat application networking, which begat application-delivery networking) — reflecting both the evolution of marketing buzzwords and new technological developments — F5 has demonstrated unswerving focus and uncommon resilience.

It’s still a strong company, with a deep management team, solid products, and an effective sales channel. Not surprisingly, the company is looking forward to posting robust fourth-quarter results.

IBM’s Acquisitions: Big One Makes News, Small One Points to Further Moves

IBM today announced two acquisitions. The larger one, IBM’s all-cash offer to buy predictive-analytics mainstay SPPS for $1.2 billion ($50 per share), drew the bulk of media attention, as it should.

The offer price represented a 42-percent premium to SPSS’s Monday closing price, and the company’s shares rallied today to close the gap.

However, the smaller acquisition might signal another big IBM move in a different market sector. In tandem with its SPSS acquisition announcement, IBM said it has purchased privately held Ounce Labs for an undisclosed amount.

Ounce Labs provides security and compliance software that scans source code of applications, hunting for security holes and compliance failures. In doing so, the software helps companies identify and solve code-related compliance and security problems early, resulting in lower costs, less risk, and fewer worries.

As CNET’s Lance Whitney reports, IBM will integrate Waltham, Mass.-based Ounce Labs into its Rational software business, which offers security and compliance testing. When the integration is complete, IBM believes the combination of the two companies will enable its customers to enjoy security analysis from source code to deployment.

Both organically and through acquisitions, IBM is constructing an increasingly credible security portfolio. It would not be a surprise to see IBM make a bigger security buy in the near future.

The History and Mystery of RIM’s Nortel Cage Rattling

As the Ottawa Citizen’s James Bagnall recounts in an article today, RIM has seemed more a provocateur than an earnest prospective buyer of Nortel’s wireless business unit.

For the reasons Bagnall adduces, I don’t think there’s any way RIM can persuade the Canadian government to reverse or otherwise challenge Ericsson’s more than $1.1-billion acquisition of Nortel’s wireless assets. Odds overwhelmingly favor that deal going through, notwithstanding RIM’s belated and obstreperous objections.

However, as I mentioned in my previous post, RIM’s real objective isn’t to have that decision overturned. RIM is applying pressure to the Canadian government to get what it really wants: Nortel’s LTE patents.

The ruse just might work, too. This drama will play itself out soon enough, and it will be interesting to observe.

What About Nortel’s Metro-Ethernet BU?

As Nortel gradually divests itself of its business units, one we haven’t heard much about is Metro Ethernet Networks (MEN) operation.

The early line had the MEN business unit going for as much as $750 million. That still might happen, but I’m skeptical, even doubtful.

As time ticks ever forward — it doesn’t go backward, as far as we know — Nortel’s MEN unit is a depreciating asset, one that doesn’t benefit from being awash in uncertainty. When a company has signaled its intent to sell off its operational business units, customers tend to be wary about making further investments in its products and services, understandably concerned about the ultimate disposition of the company and the future plans of its new ownership.

That’s why I think there’s an inverse relationship between the time it takes to arrange a sale of the MEN business unit and the amount of compensation Nortel eventually will get for it. The longer it takes to line somebody up, the lower the price Nortel will receive.

Compounding the problem for Nortel is that a couple potential bidders seem to have eliminated themselves from contention.

Ericsson, now that it seemingly has bagged Nortel’s wireless business unit — barring a belated intervention or reversal by the Canadian federal government — has signaled, at least for now, that it has no interest in other Nortel assets. Ericsson was considered a favorite to claim Nortel’s MEN unit.

Tellabs also has pulled out of the running. It was considered a potential acquirer of the MEN business.

The companies still seemingly in the MEN bidding derby, in descending order of probable serious intent, are Ciena, Sycamore, Juniper, and Alcatel-Lucent,

I can’t envision Cisco or Huawei getting involved, for very different reasons. Cisco probably has little or no interest, whereas Huawei, even if it had interest, would probably never get through the approvals process.

At this point, though, nothing much seems to be happening. That can’t be a good omen for Nortel’s creditors.