Riverdeep to acquire Edmark Corp. from IBM

Riverdeep Group PLC, a leading online developer of K-12 interactive learning solutions for science, math, and language arts, announced that it has signed a definitive agreement to acquire the assets of Edmark Corp., a wholly owned subsidiary of IBM.

Upon completion of the transaction, IBM will own a 14 percent share of Riverdeep. The agreement also establishes Riverdeep as an IBM-preferred eLearning partner to K-12 teachers, parents, and students, thereby increasing its visibility in the education community.

Edmark Corp., founded more than 30 years ago, publishes more than 50 educational titles for the K-8 and special needs markets. It has a reported customer base of about 46,000 schools.

The addition of Edmark’s offerings is expected to significantly increase Riverdeep’s revenues of $6.9 million for its latest fiscal year, which ended March 31. The transaction also will provide Riverdeep with a number of cost-saving synergies, according to Barry O’Callaghan, Riverdeep’s chief executive officer.

“Edmark is an ideal strategic and operational fit for Riverdeep,” O’Callaghan said. “Edmark’s 30 years of proven experience in the K-8 arena will round out Riverdeep’s K-12 offerings and give us entry into the special needs market … which will help us ensure that every child has access to quality educational materials.

“Our web-enabling technology will allow us to run Edmark’s products over the internet, thereby creating an early-learning subscription offering,” he added.

Following completion of the transaction, Lee Dayton, IBM’s vice president of corporate development, will join Riverdeep’s board of directors.

Riverdeep was founded in 1995 and is jointly headquartered in Dublin, Ireland, and Cambridge, Mass. The transaction is subject to investor approval.

Gateway announces new trade-in policy: accepting rivals’ PCs

In an industry first, Gateway Inc. is now offering to credit customer trade-ins of competitors’ PCs toward the purchase of one of its new systems.

The San Diego-based company, which sells computers over the internet and through its Gateway Country stores, will offer consumers and school districts the fair-market trade-in value of any Pentium processor-class desktop computers running at 75 megahertz or higher.

By Sept. 30, the company will extend the program to all PCs, spokesman Brian Williams said Aug. 4.

Of course, trade-in credit will be negligible if the computer is obsolete—and is turned in at Gateway’s instructions to a recycling center rather than the company itself.

“It makes sense,” Williams said of the offer. “You aren’t limited to the type of car you trade in at a car dealership, so why should you be limited to a brand of computer?”

Like most other manufacturers, Gateway has long accepted its own PCs as trade-ins toward new machines.

Gateway also announced a new initiative in July that will expand its support for small-business, education, and government customers. Called Gateway Networking Solutions, the initiative will provide free on-site consultation and a full range of technology services to schools and other clients.

The initiative will allow Gateway to be a one-stop shop for all of its customers’ computing needs, including network planning and design, hardware acquisition and installation, custom integration services, training, and ongoing support, the company said.

Gateway is the fourth-largest PC seller in the country, behind Dell Computer Corp., Compaq Computer Corp., and Hewlett-Packard Co., according to recently released figures from research firms Dataquest and IDC.

Questions loom about Corel’s viability

Ottowa-based Corel Corp., best known for its CorelDRAW and WordPerfect software, posted a deep second-quarter loss in June that reflected dwindling cash reserves, shrinking demand for its established software, and little indication that its new Linux-based products soon will rescue the company.

Corel posted a second-quarter loss of nearly $24 million—down from a profit of $9.7 million in the same quarter last year. Sales of $36.6 million were down 48 percent from $70.5 million in the same quarter last year.

The loss came even after Corel layed off 320 employees, or 21 percent of its work force, earlier this year. The move was intended to save some $11 million annually, but the company must find a way to save another $29 million to reach its goal of $40 million in annual cost reductions, Reuters reported.

“Survival is a question unless some changes are made … Certainly, they can’t have a lot more quarters like the one they just had,” market analyst Jean W. Orr of BlueStone Capital Partners told Reuters. “They have to change their path, and until they do that … things are just going to get worse.”

Corel competes head-to-head against industry giant Microsoft Corp. in the desktop software market. Last year, in an effort to stem the erosion of its market share to Microsoft’s Office, Corel unveiled its own version of the Linux operating system, as well as a Linux-based version of WordPerfect.

So far, however, sales of its Linux-based products have been disappointing. Corel reported Linux sales of $4.9 million over the first half of this year—only 25 percent of its target of $20 million for the year.

Corel’s investors, meanwhile, have watched the company’s stock sink from a high of nearly $40 on the Nasdaq in December—around the time that enthusiasm for Linux reached its peak—to less than $4 per share near the end of June.

Making matters worse for Corel was a failed attempt to acquire programming tool maker Inprise/Borland in May. The deal, which first was agreed to in February, reportedly would have added nearly $240 million in cash reserves to Corel’s assets. Amid questions about Corel’s financial health, however, both companies decided to call off the deal.

Industry watchers said that to improve its outlook, Corel must sharply rein in its costs while it waits for revenues from product updates and increased demand for its Linux products. But Corel has said it will not cut any more jobs, sell major product lines, or consider a merger.

Dell beats second-quarter expectations on 25 percent surge

Second-quarter revenue at Dell Computer Corp. surged 25 percent due to a strong mix of product sales and lower prices for computer parts, helping the computer maker beat Wall Street expectations.

For the three months ended July 28, Dell earned $603 million, or 22 cents per share. In the year-ago period, Dell posted a net profit of $507 million, or 19 cents per diluted share.

Analysts had expected Dell to show a per-share profit of 21 cents in the second quarter, according to a survey by First Call/Thomson Financial.

Revenue for the three months was $7.7 billion, up from $6.1 billion in the year-ago period. The company also offered a positive outlook for the remainder of the year.

“Our second-quarter results and expectations for strong industry demand in the second half of the year keep us on track toward our goal of 30 percent full-year sales growth,” said Michael Dell, the company’s chairman and chief executive officer.

Dell, the nation’s top-selling personal computer maker, is based in Round Rock, Texas.

The Library Corp. swallows CARL Corp.

In July, The Library Corporation (TLC), a leading provider of library automation and cataloging technologies, announced a deal to acquire Denver-based CARL Corp.

The combination of TLC and CARL brings together two well-established companies that share a common vision in library automation services, yet historically have served considerably different market segments.

TLC, founded 26 years ago, is well-recognized for its automation services, cataloging systems, and customer service. The company’s flagship product, LibrarySolution, reportedly is contracted for installation in more than 1,000 libraries worldwide.

CARL System, originally created 18 years ago, also is installed in more than 1,000 libraries, the company said—including such large and well-known public libraries as Chicago, Los Angeles, Atlanta-Fulton County, and Baltimore County. CARL is best-known for its strength in networking services in large environments and its various kinds of information databases.

In making the announcement, TLC President and CEO Annette Bakhtiar said, “The addition of CARL to The Library Corporation family brings together two like-minded companies that can truly leverage their respective strengths to deliver the very best in cataloging, automation, and customer service to libraries of all sizes and types. We believe this acquisition will be a strong plus for TLC, CARL, and—most importantly—librarians and their patrons.”

TLC and CARL have worked together on development projects for several years, and the two companies already share office space in Singapore, Bakhtiar added. Current plans call for CARL to maintain a major presence at its Denver location and to continue many of its activities under the CARL brand name.