Borland to Divest Dev Tools with Segue Buyout

Borland is acquiring Segue in a deal worth about $100 million and is dropping its IDE tools business, which analysts estimate to be worth about $60 million to $100 million.

CUPERTINO, Calif.—Showing his penchant for the big move, Borlands chief executive Tod Nielsen on Feb. 8 announced that Borland has agreed to acquire Segue Software while at the same time divesting itself of its integrated development environment.

Borland, based here, is acquiring Lexington, Mass.-based Segue in a deal worth about $100 million and is dropping its IDE tools business, which analysts estimate to be worth about $60 million to $100 million.

Nielsen, who has been at the helm of Borland for less than 100 days and likes to tell poker stories, is taking a big bet on steering the company more directly on a course to delivery on its focus on providing ALM (application lifecycle management) solutions to enterprise customers.

Borland by many accounts invented the IDE market when the company began selling Turbo Pascal in 1983 after licensing the compiler core written by Anders Hejlsberg, who joined the company as an architect and is now a leading architect at Microsoft.

Leaving the IDE business means that Borland will no longer sell its Delphi, C++ Builder, C# Builder, JBuilder, Kylix or InterBase product lines.

These moves put Borland in more direct competition with a handful of companies focusing on application lifecycle management, including Compuware, Mercury Interactive, IBM, Serena Software, and to some extent Microsoft with its Visual Studio Team System.

However, Nielsen said Borland is seeking a buyer for the IDE business, one that will keep the unit intact, and invest in and grow the technologies. The company has retained Bear Sterns to handle this process.

Nielsen, who said his motto is "Go big or go home," decided to make both the acquisition and the divestiture simultaneously in an aggressive move to "make it very clear to our employees, customers, partners and the world that we are serious in this application lifecycle space. One missing piece weve had in our owning of the application lifecycle has been in the quality arena. So were announcing that were acquiring Segue Software."

Borland officials gave the two initiatives code names. The divestiture was codenamed "Dartmouth," and the acquisition of Segue was code-named "Stanford."

"Were still all about development, but less about the creation of code," Nielsen said.

David Intersimone, Borlands vice president of developer relations and Borlands longest term employee, with more than 20 years at the company, said he will be joining the newly created company that will advance the IDE products.

/zimages/5/28571.gifClick here to read more about Borlands plan for a comeback.

"The developer community will be very happy with this move," Intersimone said, noting that the standalone IDE tools company will be able to better focus on developer needs.

"My passion is developers and focusing on improving the lives of developers."

Jim Duggan, research vice president, Gartner Intelligence, said, "an army always fights better if you burn the bridges behind it."

Duggan said "Borlands culture around the IDE derailed the last two times they tried to become a corporate software provider. This move lends a lot of credibility to the story theyve been telling for the last two years."

However, Borlands execution "is going to be very important… They need the sales force Segue has."

Duggan noted that both Microsofts Visual Studio and the Eclipse open source IDE took large bites out of Borlands .Net and Java tools businesses, respectively.

Although Nielsen said it wasnt that the company was bleeding in the tools space; it was more a matter of focus.

Yet, Duggan said he believes the new company that takes on the Borland IDE tools will have definite opportunities to grow the business.

Next Page: Leveraging assets.