Hosting and management service provider Loudcloud Inc. is buying a smaller competitor, Frontera Corp.
Financial details of the all-stock deal were not announced on Thursday.
Loudcloud, the Sunnyvale, Calif., company headlined by former Netscape Communications Corp. co-founder Marc Andreessen, is known for seeking only large clients willing to pay more than $1 million per year for its services.
"We think this is an excellent fit for our business, as these customers can be readily integrated into our environment," Loudcloud CEO Ben Horowitz said in a prepared statement. The deal will also bring geographic benefits and "operational synergies," he said.
But Fronteras customers—which numbered "fewer than 10," according to a Loudcloud spokeswoman—are much smaller than Loudclouds usual customers, said industry analyst Andy Schroepfer, president of Tier 1 Research, in Plymouth, Minn.
"It shows that Loudcloud is interested in expanding its options," Schroepfer said.
The Frontera customers are currently hosted by AT&T Corp.; theyll be transitioned to Loudcloud partners Qwest Communications International Inc. and Equinix Inc., Schroepfer said. Also, he said he was told that only technical staff, not Fronteras management, will wind up as Loudcloud employees.
From Fronteras perspective, they "just didnt have the opportunities and needed more money. Rather than bring it down to a nail-biter, they found a company and made a decision to sell," Schroepfer said.
Loudcloud executives were not immediately available for direct comment. The company will announce fourth-quarter 2001 earnings later this afternoon.