Acquisition to Pay for Pure-Play ASP Corio
The San Carlos, Calif.-based ASP, already considered a leading application services provider in some of its practice areas built around applications from Oracle Corp., PeopleSoft Inc., Siebel Systems Inc. and SAP AG, will gain between $25 million to $30 million in revenues for fiscal 2003, along with assets in four data centers, more than 30 new customers and about 85 employees.
"This acquisition catapulted us firmly into a leadership position," declared John Ottman, executive vice president of worldwide markets for Corio in Wilton, Conn. "We will achieve payback within the first year. Itll help us achieve positive cash flow in the next fiscal year," he added.
The acquisition of Corios closest competitor, a significant event in the consolidation of the market, pits Corio squarely against large IT outsourcers, such as IBM Global Services and Electronic Data Systems Corp. in their ASP businesses. "Corio moved up market in the types of customers we are working with, and EDS and IBM in the last year started to emphasize their ASP businesses much more so than in the past. Going forward in the competitive landscape, well be dealing with those fellas," he said.
Customers will gain from the acquisition greater depth of experience in both the SAP and Oracle practices, access to Qwest Cyber Centers and the Qwest network and then some, Ottman believes.
"We think our customers gain technical depth, access to some of best infrastructure thats out there, and theyll benefit from a much more financially strong Corio," he said.
Among Corios customer base with the acquisition are ABN Amro, American Express, Host Marriott, Mitsubishi, National Semiconductor and Toshiba.
The pure-play ASP was able to execute the $15 million acquisition partly because of its strategy to use the "commodity" hosting infrastructures of third parties rather than building its own data centers, according to Ottman, who left open the door to future acquisitions for Corio.