Veritas Expands Utility Computing Portfolio with Ejasent Acquisition

Strategic Insights -

Veritas, the California-based storage software company, has made its third major acquisition in the utility computing space with the purchase of Ejasent, a US computing application company, for $59 million. The move is part of Veritas's strategy to establish itself as a market leader in the emerging sector of utility computing, which provides computing services such as processing power, storage, and software applications "on tap" to corporate clients. Veritas's CEO, Gary Bloom, confirmed that the company has the resources and appetite to make further acquisitions, with five or more potential targets currently being considered.

Key Takeaways:

  • Veritas has acquired Ejasent for $59 million, its third major acquisition in the utility computing space
  • Ejasent's software allows customers to automatically shift software from one server to another and measure computing resource use for billing purposes
  • Veritas's "utility" computing products will be on the market by the second quarter
  • The company is competing with IBM, Sun Microsystems, Hewlett-Packard, and EMC in the emerging sector of utility computing
  • Veritas has seen significant sales growth in non-US markets, with sales rising from 28% to 35% since the end of 2000, with the bulk of this growth coming from Europe
  • Analysts expect Veritas's fourth-quarter earnings to surpass $500 million, its first half-billion dollar quarter
  • Veritas CEO Gary Bloom expects growth from across the company's product platform, including storage, high-availability, and disaster recovery products
  • The company's CEO acknowledged that there is greater market skepticism about utility computing outside the US, but believes the European timeline of acceptance is "probably more realistic"

Statistics:

  • $59 million: The price Veritas paid for Ejasent
  • 28%: The proportion of Veritas's sales coming from the US at the end of 2000
  • 35%: The proportion of Veritas's sales coming from non-US markets currently
  • 2-3%: The annual non-US sales growth rates Veritas was targeting
  • 500 million: The expected fourth-quarter earnings for Veritas
  • 4: The number of major acquisitions Veritas has made in the utility computing space

Sources:

  • "Veritas Buys Ejasent to Bolster Utility Computing Portfolio" (Financial Times)