Legato Up for Grabs

The midrange backup and storage management vendor is for sale, but no buyers are close to an announcement, say industry watchers.

Midrange backup and storage management vendor Legato Systems Inc. is for sale, but no buyers are close to an announcement, industry watchers said Friday.

"They are always in perpetual discussions with others. Theyve been cheap for two years. Theres no imminent deal," said Steve Duplessie, founder and senior analyst at Enterprise Storage Group Inc., in Milford, Mass.

Officials of Legato, in Mountain View, Calif., were not available for comment. Legato sells the popular NetWorker backup suite and DiskXtender/EmailXtender management tools. For backup products it competes against Veritas Software Corp. and IBMs Tivoli group, while all major disk array, SAN, and switch companies compete in the management software arena.

EMC Corp. and IBM are Legatos main suitors, industry watchers say. "I thought EMC should have done it a year ago," ESGs Duplessie added. Officials of Armonk, N.Y.s IBM declined comment; officials of EMC, in Hopkinton, Mass., and Veritas, also in Mountain View, said they do not comment on rumors.

Hewlett-Packard Co. is also a leading suitor, and is meeting with Legato next week, an industry official close to both companies said, on condition of anonymity. Veritas has already declined the purchase, the source said.

Legatos fourth quarter 2002 earnings, announced this week, increase its attractiveness. The company had revenue of $76.6 million and net loss of $10 million. Revenue increased from $68.1 million in the third quarter, $61.6 million in the second, and $55.6 million in the first, while loss declined from $47.9 million a year ago. For the year, Legato had revenue of $261.9 million with a $228.8 million loss, versus 2001s $242.6 million in revenue with a loss of $81.5 million.