Welcome to GISWeekly! On August 31, Intergraph announced the signing of a definitive agreement to be acquired by an investor group led by Hellman & Friedman LLC and Texas Pacific Group, in a leveraged buyout transaction worth approximately $1.3 billion. Read what the experts have to say about this announcement and other trends in this week's Industry News.
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Susan Smith, Managing Editor
Intergraph Acquired by Investor Group
By Susan Smith
Hellman & Friedman and Texas Pacific Group are leading global private equity firms with great capital resources and expertise is software technology, according to Halsey Wise, Intergraph president and CEO. A press release issued by Daratech, Inc. stated that “Texas Pacific Group is based in Fort Worth, Texas and has more than $20 billion in assets under management, while Hellman & Friedman, based in San Francisco has raised more than $8 billion in buyout funds.” JMI Equity, a private equity firm based in San Diego and Baltimore that focuses exclusively on investments in the software and business services industries, was also involved in the transaction.
Bryan Taylor, partner at Texas Pacific Group commented on the statement announcing the deal, "Intergraph is well-positioned to continue to provide its market-leading software and services solutions to the energy, chemical, and shipbuilding infrastructure design markets, as well as to the increasingly relevant areas of critical infrastructure protection and homeland security."
In a discussion with Jonathan Morgan of Mandelbaum & Morgan, Inc., he explained the significance of the buyout. “From the investor group's perspective they see a company with enormous potential with great products in the pipeline and as a private company there are additional opportunities to pursue growth because after all, if you're not public anymore it means you're more flexible, your more nimble. You can comfortably take a longer term view just because you're not subject to the ups and downs of Wall Street anymore. So the ability to invest the business and grow the business is enhanced as a private company. It's happening a lot -- just today a semiconductor company that was spun off of Motorola called Freescale, is going to be taken private as well. This is very much within the sweet spot for Hellman & Friedman and Texas Pacific Group.”
“There is a perception that as a private company, their [Intergraph's] opportunities to pursue additional growth stand to be enhanced. They will able to plan for the long term. Hellman & Friedman and Texas Pacific Group have an investment horizon that's far longer than most shareholders. Shareholders are thinking about the next quarterly earnings report or the next big move. These guys are in it for the long haul which will ultimately benefit the company.”
Monica Schnitger of Daratech confirms this view. “There are a lot of compelling arguments for companies to be private: the ability to run the company on a long-term plan without public scrutiny every quarter; no overhead for public regulatory compliance; in Intergraph's case, focusing on the operating units and not on the intellectual property (IP) litigation ... A lot of publicly-traded software companies are pondering the benefits and drawbacks of taking their organizations private. We hear most about publicly-traded software companies, but there are very large, successful, privately-held firms all over the world and in all areas of the software universe.”
“Investors like Hellman & Friedman and Texas Pacific Group usually look at a 5 to 7 year investment cycle, so any changes are likely to be quite a bit in the future, if they happen at all,” Schnitger said. “It seems typical in these kinds of deals that the new owners will examine the company's daily operations in quite a bit of detail once they take over, look at the end-market and growth opportunities and tweak the business to maximize growth. The investors will be positioning the company for a sale at a premium to what they paid or in an initial public offering. It's impossible to say now whether the investors will maximize their return by the sale, in 5 to 7 years, of one entity, two entities or more -- it will depend on the business climate at that time, how the end-markets perceive a combined software and services offering, how Intergraph's products evolve over the period, etc.”
No layoffs or management changes are planned, it's business as usual, and the company will for the foreseeable future, remain in Huntsville, said Morgan. The only difference will be the company will be operating as a private entity.
The transaction is to be financed through a combination of debt and equity financing. It is notable that in the geospatial industry, of the three big players in that space, ESRI, Bentley and Intergraph, ESRI and Bentley remain private.
Intergraph's Revenue Growth
According to Schnitger, “Intergraph's revenue growth comes from its two operating divisions, Process, Power & Marine and Security, Government & Infrastructure. PP&M has been the growth and profitability engine for Intergraph in recent periods, reporting revenue of $53.3 million in Q2 2006 -- that's up 32% year/year and up 21% sequentially. To put PP&M's Q2 revenue in perspective: this is the highest revenue total ever reported in a quarter and PP&M's 32% year/year growth rate exceed Daratech's forecast for the overall market by almost four times. PP&M continues to do an outstanding job promoting its new SmartPlant Enterprise Suite brand, which covers virtually all of the software the company sells, including its traditional big sellers, such as PDS and ISOGEN, as well as its new generation products. Although the company did not break out Q2 sales by product, Daratech believes that PP&M's new-generation products are growing nicely even while PDS sales continue to be strong. PP&M's annual revenue growth has been about 13% over the last two years as it rolls out its new product offerings and reinvigorates its installed base.
SG&I reported Q2 revenue of $100.1 million, down 5% from a year ago but up 8% sequentially. For the first half of 2006, total revenue was down 5%. Intergraph explains that the revenue decline is due, to some extent, to the fact that it now has many long-term contracts, under which revenue recognition is pushed out to the later stages of the contract - meaning that Intergraph cannot recognize the revenue until certain milestones are met. Contract issues have affected SG&I's growth in recent quarters, as the typically large deals SG&I signs may slip from quarter to quarter -- but do eventually close -- and as Intergraph works with its clients to resolve issues about ongoing contracts. In general, SG&I's revenue has trended upwards at about 2% per year as the company closes increasing numbers of public safety contracts, grows sales of digital mapping cameras and geospatial imaging solutions, and performs contract work under long-term US Federal government contracts.”
Top News of the Week
Autodesk, Inc. announced the release of Autodesk Topobase 2007 infrastructure design and management solution. Built on Autodesk Map 3D and Autodesk MapGuide Enterprise software, Autodesk Topobase 2007 addresses the challenges faced by organizations that collaborate on infrastructure projects, such as water or wastewater networks, by enabling teams to share spatial information across departments. Topobase customers can see the big picture with a more integrated view of all of their enterprise data, and improve productivity and bottom line results by completing projects faster and maintaining assets more efficiently.
CH2M HILL's Enterprise Spatial Solutions business announced it has advanced its partnership with Autodesk, Inc. by providing technology integration and business consulting experience for Autodesk Topobase 2007, an infrastructure design and management solution.
As a leading global full-service engineering and consulting firm, CH2M HILL has seasoned engineering expertise in Topobase core markets: utilities, municipal governments and engineering operations. In addition, CH2M HILL Enterprise Spatial Solutions (ESS) brings a wealth of spatial solutions integration and consulting expertise to these core markets, providing spatial solutions to both public and private utilities organizations.
Intermap Technologies Corp. announced that it has accelerated its plan for creating a high-resolution, three-dimensional map of Western Europe. Driven by demand within the European automotive, government, and insurance sectors, the Company's plans include the mapping of 13 Western European countries in their entirety by the end of 2007. Once completed, these datasets will be the most accurate elevation models of Western Europe in existence.
Gearworks, a provider of on-demand mobile workforce management software, and Networks In Motion(TM) (NIM), an award-winning wireless navigation and location-based services (LBS) company, announced a strategic partnership to provide service-driven companies powerful voice and map-enabled driving directions on a range of mobile devices.
The new solution delivers NIM's advanced mapping technology through Gearworks' mobile workforce management software -- a suite of wireless and Web-based solutions that leverage GPS-enabled mobile devices to provide customers real-time visibility and control of field workers' activities.
In an effort to focus on systems integration and solutions development, Bergmann Associates announced that it has reached a preliminary agreement to spin off the Dig-Smart software product which has served as a backbone solution for Bergmann Associates Geospatial Solutions Business Segment since 2000. The software product Dig-Smart will become an independent Limited Liability Corporation operating out of New York and New Mexico, USA and lead by the former Business Segment Leader for Geospatial Solutions at Bergmann Associates, Jim Schoenberg.
A national project looking to increase the visualisation of underground assets via 3-D mapping is being supported by geographic data and satellite navigation technology from Ordnance Survey as core components.
VISTA (Visualising integrated information on buried assets to reduce street works) is a collaboration of 21 organisations developing an integrated infrastructure to enable data sharing for all buried assets across Great Britain.
Ordnance Survey's intelligent large-scale data OS MasterMap Topography Layer is the reference base underpinning preliminary trials by researchers at Leeds and Nottingham Universities to integrate disparate records of buried pipes, cables, ducts and wires.
VISTA will combine this information with in-situ survey observations using real-time centimetre-level services provided by OS Net, Ordnance Survey's GPS correction network, and by Leica Geosystems' SmartNet, which is enabled by OS Net. OS Net is a network of more than 90 GPS base stations that improves the standard accuracy of raw GPS readings to augment any application that requires GPS positioning.
Tele Atlas, a global provider of geographic content, and Dow Jones VentureWire, the leading producer of daily newsletters and industry events for the venture capital market, announced an open invitation for developers to participate in the Tele Atlas LBS Innovator Series, a program that will enable wireless application developers to expand their visibility, credibility and success with key participants in the industry. Eight finalists will be chosen to present their innovative solutions to venture capitalists and industry experts at the Dow Jones VentureWire Wireless Ventures conference in April 2007. Registration opens in October 1, 2006. Participation is open to all mobile LBS applications using Tele Atlas data.
To learn more about the Tele Atlas LBS Innovators Series, including the latest information and submission instructions, please visit the TeleAtlas LBS Series website; or sign up to receive additional information via TeleAtlas DeveloperLinkSM and enter the promotional code “CTIA906.”
Last February Aerodata announced the finalisation of its new digital orthophoto mosaic of The Netherlands. This dataset is now on display at Google Earth. The imagery was acquired entirely with the company's 90 megapixel UltraCam-D large format digital frame camera, mounted in their fast Fairchild Merlin survey aircraft. The 7000 images have been assembled to one large (850GB) seamless colour aerial photo mosaic at 40cm resolution.
Shortly the dataset will be available to the public for purchasing areas on the internet at the Aerodata website
Wearing light solar-powered GPS satellite transmitters, wild swans from Mongolia are winging their way across Eurasia, while land-bound scientists tracking the birds´ journeys on computers say that these unique studies will shed light on how wild birds may be involved in the spread of avian influenza.
In August, a team of international scientists from the United Nations Food and Agriculture Organization (FAO) and the U. S. Geological Survey (USGS) joined the Wildlife Conservation Society (WCS) and Mongolian Academy of Sciences (MAS) in the surveillance project, which is part of the Wild Bird Global Avian Influenza Network for Surveillance (GAINS) program funded by USAID. The team attached the GPS transmitters to wild whooper swans in an effort to track the birds to their wintering grounds.
Eric Brown has been appointed Head of Technology at Multimap, bringing a wide range of skills and experience, including many years working on software and systems for the oil industry and, most recently, at the National Lottery. In March 2001, Eric was the first technical member of the National Lottery's interactive unit, in which he established and built a technical team of 180 people to deliver the National Lottery on the web, mobile and interactive TV.
This summer Genasys, a company specialized in location-based services, geographic information systems, and professional services, welcomed two new professionals to its executive team: Alberto Nicoletti as Director of Sales and Marketing and Juan Carlos Martínez Peinado as Director for Global Business Development.
These appointments come at a time when Genasys is planning to widen its presence in the LBS value chain. Genasys has long been a recognized provider in the middleware space as well as a provider of applications to its mobile operator clients.
Tensing USA announced that it has won four contracts from international utility and local government organizations to implement GIS-related products from its Tensing line of mobility solutions. The contracts have been awarded to Tensing by MainPower of New Zealand, Origin Energy of Australia, Blacktown City Council in Australia, and the City of Tshwane in Pretoria, South Africa.
Optimal Geomatics Inc., a geomatics solutions provider to engineering and geospatial professionals, is pleased to announce the award of a contract by a Western electric utility company valued at US$3.5 million.
The project requires Optimal to utilize its data acquisition platforms, engineering practices and software to determine the maximum safe operating condition for each transmission line conductor. The sag of a line is impacted by the amount of current flowing through the line and the ambient weather conditions. It is essential for an electric utility company to understand the capacity of each line to safely and effectively manage the power grid.
Impress Software, a leading provider of packaged integration applications for SAP Enterprise Asset Management (EAM) and Enterprise Project Management (EPM) customers, announced that it has been selected by Aquarion Water Company to integrate its SAP and ESRI systems. Aquarion will implement Impress Software's Impress for GIS, a solution that enables businesses to relate asset information between SAP and ESRI and streamline business processes that span both systems.
Blue Marble Geographics announced applied geodesy training in their Geographic Calculator class after the GIS for Oil and Gas Conference on Friday, September 22nd. This daylong session is an in-depth training course using one of the most powerful and flexible of data conversion applications available today. The course also features education on the basics of geodesy and mapping which is useful for both the novice or as a refresher for the expert geodesist. In fact, many people take this course just for the geodesy training alone. Here is a chance to not only educate yourself on the foundations of Geodesy and mapping concepts, but learn how to really leverage the power of Blue Marble software.
Call toll free 800-616-2725 or email Email Contact to reserve your spot now. On-site training sessions can be conveniently planned to fit your schedule.
Google Inc. released Featured Content for Google Earth, a new showcase of multimedia overlays in Google Earth that connect users to information about the world around them from a variety of premium content providers.
Users can access these informative overlays by clicking on the "Featured Content" checkbox in the Google Earth sidebar. In doing so, icons for each Featured Content provider will span the globe, enabling users to click on individual locations and learn about the area's significance. The Featured Content showcase will be routinely updated to include innovative and diverse contributions from additional content providers.
Graphic Technologies, Inc. (GTI) released the GT/Field product earlier this year, and it has sparked intense interest. GT/Field allows companies to implement data collection applications without programming.
GT/Field's forms can be configured to display attributes that are already in the data, such as numbers for poles, valves, or switches. GT/Field can also collect attributes that are not in the data.
MapQuest announced the availability of MapQuest(R) Navigator, a Global Positioning System (GPS) enabled application that provides turn-by-turn, voice-guided directions for wireless subscribers using a variety of Sprint (NYSE:S) and Nextel phones. The new service and downloadable application features an in-car navigation-like system with an exclusive moving map display and provides a seamless navigational experience while allowing users to receive phone calls.
Graticule announces the release of a Telemapix, a new database and mapping wizard for its successful PostcodeAnalyst 2 application for computers running Microsoft Windows 2000/XP environments.
Telemapix lets users connect to their existing database applications, perform queries to retrieve chosen target address records and automatically maps these to show the distribution of contacts. If the database contains information in addition to a contact name and address in the UK, such as sales by product or service, value of sales, repeat business, patient health, students by type of degree scheme, etc.
DMTI Spatial, Canadian provider of comprehensive geospatial products and services announced that Home Depot Canada, a division of the world's largest home improvement retailer has implemented DMTI Spatial's digital map data services to optimize and standardize their home delivery services.
DMTI Spatial services assist Home Depot Canada by providing an effective means of presenting their national delivery fees structure. Home Depot Canada's employees now have the ability to provide their customers with clear, illustrative, and standardized pricing based on their customers postal code location.
Magellan, creators of the Hertz(R) NeverLost(R) and a leading global innovator of outdoor and vehicle navigation solutions, announced the introduction of the Magellan RoadMate 2000 series of three small, powerful and affordable portable vehicle navigation devices. The series includes the Magellan RoadMate 2000, and the traffic-ready 2200T and 2500T, the world's first rugged, IPX-4-waterproof, CrossoverGPS designed to provide navigation for both driving and outdoor adventures off road, on foot and on water.
Around the Web
CIBC World Initiates Autodesk with Outperform September 8, 2006, BusinessWeek Online --Analyst Philip Winslow says he thinks the company remains well positioned for robust future revenue, operating profit, and free cash flow growth given its sustainable competitive advantages and opportunity for operating margin leverage.
Korean GIS Firms Rushing into Patent Applications, September 6, 2006, Korean IT News - In line with adoption of new technologies and equipment used for geographic information systems, companies are rushing to file for patents.
Hanjin Information Communication said Tuesday that it won a total of 10 patents for its proprietary 'black-and-white and color film developing system.' The new patented system is designed to process both black-and-white and color film at the same time, improving user convenience significantly compared to the existing products used only for white-and-black or color film.
IMTA (Americas) Annual Conference & Trade Show 2006
Date: September 17 - 20, 2006
Place: St. Julien Hotel & Spa Boulder, CO USA
Far North Queensland GIS User Group (FUNGIS)
Date: September 18 - 19, 2006
Place: Civic Reception Room Cairns City Council Building, Spence Street, Queensland, Australia
The non-profit group 'Far North Queensland GIS User Group Inc.' (FUNGIS) is pleased to announce the 2006 Seminar - 'Sandbags and Sandals - An Emergency Spatial Information Management Forum in the Tropics'.
Date: September 20 - 23, 2006
Place: Münster , Germany
It will be the follow-up meeting to the highly successful GIScience 2000, 2002, and 2004 conferences with over 300 researchers attending each time. GIScience 2006 will again bring together scientists from academia, industry, and government to analyze progress and to explore new research directions. It will focus on emerging topics and basic research findings across all sectors of geographic information science.
FME Worldwide User Conference 2006
Date: September 21 - 22, 2006
Place: Vancouver, BC, Canada
Block off September 21-22, 2006 now to take advantage of this unique opportunity to learn new tips and techniques that will help you maximize your return on investment and improve your productivity with Safe Software products.
URISA Annual Conference
Date: September 26 - 29, 2006
Place: Vancouver Convention Center Vancouver, British Columbia, Canada
Go beyond basic technology and applications and contemplate issues related to designing, managing and applying information technology - at its highest and best use - to improve our urban and regional environments. Join your colleagues, peers, thinkers and doers from around the world at URISA's Annual Conference.
Date: September 27 - 29, 2006
Place: Orange County, CA USA
This unique, hands-on workshop teaches the fundamentals of how to use a Geographic Information System (GIS) in a way that is particularly relevant to social service providers, planners and researchers. Participants learn to make thematic maps of their community, geocode addresses and perform spatial queries and analysis. Participants also learn to extract and map Census variables such as race, poverty, language, education, health and many other demographic variables. Exercises are designed for beginners. Intermediate Excel skills required. Each students is assigned a computer on which to work for the day.