DIVINE REVENUES RESULT IN BIGGER LOSSES Technology rollup divine reported

Divine revenues result in bigger losses technology

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DIVINE REVENUES RESULT INBIGGER LOSSESTechnology rollup divine reported losses of$70.9 million for the quarter ended March 31,on revenues of $146 million. For the sameperiod a year ago, divine reported losses of$65.6 million on revenues of $9.8 million forthe same quarter last year.divine is acquiring Viant for $94 million. Viantreported $5.4 million in revenue for the mostrecently reported quarter, up 10% from thesame three months of last year. Viant alsoreported losses of $6 million during the quar-ter, contrasted to losses of $12.7 million ayear ago when the company was undergoing arestructuring.EDS GETS NOD FROM NAVYEDS will add capacity for 100,000 more usersto the intranet it is building for the Navy andMarine Corps. After successfully testing its ini-tial implementation of 60,000 seats, the totalnumber of seats is expected to reach 360,000.The contract is valued at $6.9 billion.ICON LEAVES SWEDENIcon Medialab International is leaving Swedenafter its star fell in the post dot-com goldrush. Icon is now a part of the Dutch consul-tancy Lost Boys. CORRECTIONAvanade was misspelled in the April issue. Weapologize for the error. 13
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I N T E L L I G E N C E B R I E F I N G 14 Global IT Consulting Report, May 2002. ©Copyright Kennedy Information, Inc., 800-531-0007. All Rights Reserved. Reproduction prohibited by law. M&A to drive consolidation among IT firms of all sizes Expect the pace of mergers and acqui- sitions of IT consultancies to increase as the economy picks up, clarifying which firms retained value worth purchasing. Europe is particularly ripe for some major M&A activity. Many of KPMG’s and Andersen’s European partnerships remain for sale, and Deloitte’s and PricewaterhouseCoopers’ Euro- pean practices are at risk of defec- tions as their parent companies divest their consulting arms. At stake are huge pieces of business. For example, KPMG Interna- tional’s European consultancies generated about $1.5 billion in annual revenues in FY01. M&A recovery tied to economy Right now there is too much risk per- ceived in major acquisitions. But that psychology will change as IT spending returns. While fear of making a costly error tends to retard the number of M&A transactions in a downturn, fear of being left behind by the competition tends to dominate in an expanding economy. As the risk paradigm shifts, capital markets become more receptive to deals and loosen the flow of funds, says John Niehaus, Managing Director of De Bellas & Co., an investment bank. With nearly $40 billion in cash, Mi- crosoft could buy a major IT consulting firm, a recent Gartner Group report speculates. Microsoft plays down such speculation. It has historically opted to form low-risk alliances, such as its joint venture with Accenture known as Avanade, than to take a chance with large acquisitions.
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