The October 13 squib by Kara Reeder on IT Business Edge about Rocket Software sent me on scavenger hunt the morning of October 14. The Boston Globe article to which Kara referred and subsequent links and Googles implied there was a mystery with questions such as
- “How large an enterprise-software company is Rocket?
- “Where did the new investment come from?”
- “Who are the 24 companies it has acquired?”
- “What was the patent lawsuit with CA settled in February 2009 all about?”
Questions I was asking myself after following the threads from Kara’s piece included
- “Why does a Dutch company have to file with the U.S. Securities and Exchange Commission (SEC)?”
- “How did that acquisition of Seagull turn out, any way?”
- “IBM UniVerse… the UniVerse name rings a bell but I don’t associate it with IBM?”
There’s a lot of speculation about the timing of the announcement that Rocket acquired IBM UniVerse on October 1 and the SEC filing on October 9 but I don’t think it’s likely that Rocket Software, doing $50 million or so in software sales a year, paid over $90 million for IBM’s UniVerse business. Maybe Rocket sought financing so as to pay off CA—and have a little left over to afford a tony (or is it spelled toney?) Massachusetts address like Newton. But why bother if it has five years to pay back CA.
So here (I apologize for the open-barn-door nature of it) is some belated information technology (IT ) investment advice that might still be actionable. Work your way down the Software 500 list looking for slow-growing publicly held infrastructure enterprise-software suppliers, likely with an IBM mainframe connection.
Rocket Software, a company that has apparently been quietly funding acquisitions from its profits for a decade, now has some real money in its pockets.
-- Dennis Byron
(P.S. The answers to all my questions follow if you care:
(The answer to the SEC-related question was easy, just a matter of bad memory on my part. It wasn’t Rocket Software that was Dutch. It was good old Seagull, the mainframe screen scraper guys acquired by Rocket in 2007. To be less flip, Seagull described itself at the time of the acquisition by Rocket as specializing
“... in technology that transforms "legacy" applications into SOA-compliant Web services, helping enterprises achieve exponentially faster IT support for business change, governance and compliance.”
(Seagull continues to market its software separate from Rocket. Rocket is based in Newton, MA and was formed in 1990, making it probably the “youngest” IT/enterprise-software company with a “Route 128” address. Route 128, which circles Boston, was of course the Highway 101 of its day.
(The SEC filing is a Rule 505 Form D event. Rule 505 allows some companies offering their securities to have those securities exempted from the registration requirements of the U.S. federal securities laws. As the SEC site explains:
(“Form D is a brief notice that includes the names and addresses of the company’s owners and stock promoters, but contains little other information about the company.”
(That’s for sure when it comes to the Rocket filing. I remember chasing down Rocket when they acquired Seagull but hadn’t paid much attention before or since. They apparently liked their privacy and that was OK with me since no one would be investing in them. Well that was only half true. You were certainly investing in the many companies Rocket acquired for dimes on the dollar and with little outwardly publicized funding—until this recent SEC filing—except for a line of credit from Wells Fargo.
(Catching up with Rocket now, it looks like its acquisition bandwagon has been at the head of a little known parade for a decade. Rocket is to infrastructure enterprise software what Infor is to applications enterprise software (that is, what the old Computer Associates used to be to all enterprise software). Acquired companies and brands in addition to Seagull (Bluezone/Legasuite) include Areotext (from Lockheed), ARKIVIO, CorVu, Gentia Assets (from Open Ratings) some IMS utilties from Telcordia, Mainstar, NetCure, Peritus, Servergraph, SmartDB, StorageNetworks STORos Storage Manager, SystemsSoft, and TSCI. Rocket tried to scoop up NetManage, a Seagull competitor, in 2008 but NetManage ended up going to Micro Focus.
(As for the implied mystery, the privacy fetish is apparently still a Rocket Software company characteristic. How large is Rocket Software? I found that although Seagull and CorVu were listed on the Software 500 before they were acquired, they don’t seem to be separately listed in the latest John Desmond bible. And Rocket is not there either that I can see. My guess: maybe this smorgasbord is doing $50 million a year in software sales.
(As for the law suit with CA, Inc.--not to be confused with the old Computer Associates, two years ago CA said that certain Rocket developers misused intellectual property from one of the CA-related entities and improperly incorporated software code from it into certain software products being developed at Rocket as far back as 1999 and 2000. Rocket said at the time that it believed that “the claims are meritless,” but in Febnruary of this year Rocket agreed to license technology from CA, including source code authored several years ago and related trade secrets, for $50 million to be paid in increments through 2014--see the latest CA, Inc. 10-K.
(As for my final question, over the years, Rocket had purchased the Visionary brand from IBM back in 2000 and has many other mainframe-oriented products as noted above. That, I guess, is what led up to the October 2009 acquisition of IBM UniVerse.
(My memory cells clicked in since I began writing this post 15 paragraphs above. My thought association exercise went like this:
- UniVerse…
- Jim Capeless…
- Paris in the early 1970s...
- Dick Pick
(Some of the story belongs on my travel blog, not here. Most of it belongs in my unwritten “People’s History of Information Technology,” where people like Pick and Capeless get treated with the same depth as Gates and Jobs. If I ever write it, it will be a history where the winners (Highway 101 again) don’t get to write the history books.
(But the nut of it is that UniVerse is a remnant of IBM's acquisition of the database part of Informix in 2001, part of which had previously been called Ardent, which was formed by a merger of Unidata and VMark in 1998. VMark, where Capeless was President in the 1980s and 1990s, after working for Honeywell Bull in the 1960s and 1970s, had written its own version of the legendary Dick Pick’s widely licensed data management concepts back in the 1970s.
(Making this even more confusing, what was left of Informix was re-named Ascential, which was also acquired by IBM in 2005.)