Weekly Digest
Weekly Digest Issue No. 457
19-03-2009
by Deirdre McArdle
Tech titans talk tie-up | US offers rich pickings for Irish firms | Irish line rental costs highlighted | Payzone saga takes another turn | Ideas Campaign: good idea?
Tech titans talk tie-up
The biggest buzz of this week was generated by reports suggesting that IBM is in talks to acquire Sun Microsystems. According to the Wall Street Journal, which quoted people familiar with the discussions, IBM is offering to pay at least USD6.5 billion in cash for Sun, which has long been touted as a possible acquisition for Big Blue, HP, Cisco or Dell. In fact, reports suggest that Sun has been out and about over the last few months looking for a buyer. Sun, once a dot-com darling, has struggled since the bubble burst in the early 2000s. More recently, the economic downturn has hit the tech firm hard as demand for its high-end hardware nosedived; in November 2008 it said it would cut 6,000 jobs as it tried to rebuild its business model around open source software. Industry commentators are of the opinion that Sun needs this acquisition more than IBM, although it has been acknowledged that the acquisition would bolster IBM's position on the internet, in software and in the finance and telecoms markets. This would be the largest ever acquisition by Big Blue, exceeding its USD5 billion purchase of business software firm Cognos last year. Neither Sun nor IBM has commented on the reports of a possible acquisition yet. Analysts predict that if the acquisition does go ahead it could trigger a raft of similar deals in the tech sector.
US offers rich pickings for Irish firms
An Irish trade mission to New York and Washington this week has proved fruitful, clocking up contracts valued at around EUR100 million so far. An Taoiseach Brian Cowen took time out of his hectic Washington schedule to lead the mission, along with Enterprise Ireland. Among the Irish companies that have made announcements are ALISON, Avaeon Solutions, Information Mosaic and TerminalFour. E-learning firm ALISON signed a contact with US firm Geographic Solutions to provide it with Basic Skills Training courseware. Financial details of the deal were not released. Meanwhile, Galway-based software applications firm Avaeon Solutions struck up a deal with US insurance firm Safeway Insurance. Under the terms of the contract Avaeon will supply Safeway with its .NET-based application framework Topoix, which will help the firm develop a system to manage the lifecycle of its customers' policies. Dublin-based Information Mosaic, a provider of asset and wealth management solutions, announced it had signed an agreement with Broadridge Financial Solutions, which supplies technology-based outsourcing solutions to the financial services industry. Industry sources estimate that this latest deal, along with two recently signed contracts in Europe, will net Information Mosaic in the region of EUR20 million. Elsewhere, web content management firm TerminalFour netted USD200,000 from contracts with University of Virginia School of Nursing, University of Massachusetts Dartmouth and the United Nations Development Programme. The Irish firm will provide the institutions with enterprise web content management solutions. In order to facilitate its new US-based customers, TerminalFour plans to open an office in Boston. Other firms who announced deals include Advanced Innovations, BioTector Analytical Systems, Dromone Engineering, Rockall Technologies, Softco, MindLeaders, Interactive Services, Pulse Learning and Curam.
Irish line rental costs highlighted
It emerged during the week that Ireland now has the dubious honour of coming top in the world for line rental costs. According to a report (PDF) conducted by the International Telecommunications Union (ITU), fixed line rental costs in Ireland come in at USD42.20. Norway is the next highest, though some 10 percent cheaper than Ireland at USD37.60. When it comes to prepaid mobile phone costs, while not the most expensive, we rank 17th out of the 150 countries surveyed. The findings have been condemned by telecom lobby group IrelandOffline, with chairperson Eamon Wallace calling for "a root and branch reform of the system of 'gentlemanly regulation' especially in the field of telecommunications". The ITU report has also prompted Labour's telecoms spokesperson Liz MacManus to call on ComReg to conduct an immediate investigation into "these apparently massive comparative costs for line rental in Ireland". As Ireland struggles with its competitiveness and its ability to attract foreign direct investment, being known as the country with the world's most expensive line rental is certainly not a desirable tag line.
Payzone saga takes another turn
As unsettled e-payments firm Payzone makes moves to refinance its EUR276 million net debt, a couple of rivals have begun to circle. Former executives at the firm John Nagle and John Williamson, who were ousted from the boardroom last year following a bitter battle, are preparing to grab control of Payzone back from investment firm Balderton Capital, which owns 54 percent of the e-payments company. Payzone's debt is held with a syndicate of seven banks, led by Royal Bank of Scotland. The firm is currently in talks with the banks to size up the possibility of swapping a chunk of debt for a large equity stake in the business. Nagle and Williamson are understood to be about to approach the banks too with an alternative proposal, which is likely to involve the banks taking some equity but at a lower level than that being suggested by Payzone. Reports on Wednesday suggest that the Irish firm's UK rival, Paypoint, could also be readying an attack. It's believed the UK firm has also made a cautious approach to Royal Bank of Scotland, the nature of which is unknown as yet. Payzone has been struggling in the current economic climate and has sold off its divisions in France, Italy and Spain in a bid to cut costs. It's also trying to sell off its business in Germany and has cut 100 jobs in the past year.
Ideas Campaign: good idea?
The Ideas Campaign, a private group founded to try and come up with ways to help reignite Ireland's economy, has so far attracted over 2,500 ideas, across 19 categories. Some of the proposed ideas include the following: the Government to integrate its IT systems; state organisations to focus R&D efforts on space programmes; and Enterprise Ireland to set up "virtual offices" for start-up companies to provide advice on patents, legal topics and other issues. The website is at the heart of the campaign, which is also being promoted on Facebook, Twitter and LinkedIn. The online campaign came about following an appearance by the managing director of IT consultancy Amas, Aileen O'Toole, on Prime Time to speak about ways to stimulate the Irish economy. The campaign's advisory group is made up of figures from business, academia, economics and the voluntary sector. The ideas received will be turned into a "clear, pragmatic, action plan" that will be presented to the Government in April. An Taoiseach Brian Cowen has welcomed the campaign and has said the action plan will be "fast-tracked to the Cabinet Sub-Committee on Economic Renewal for assessment and implementation". However, consumer watchdog website ValueIreland has poured cold water on the campaign, warning people who have submitted ideas that once they send in their idea it no longer belongs to them. Diarmuid MacShane, head of ValueIreland, has expressed scepticism with the scheme, saying there are many other ways to develop ideas, such as approaching a local enterprise board. That may well be true but the impact of thousands of ideas being put to the Government at the same time through a recognised, national campaign is likely to hold more weight.
Caped Koala Studios has built a virtual world for kids, combining education and social networking 