Logicalis turns blue for a song

IBM has bought the Australasian arm of network services integrator Logicalis for $88.5 million, in a move that could put increased pressure on remaining rivals.
 
The integrator's Australian and New Zealand arm made $64 million in the six months to August 2003.
 
Stuart Hendry, managing director at Logicalis Australia, said Logicalis staff from Australia and New Zealand were gaining entry into a global organisation that would net them increased resources and career opportunities.
 
The buyout would give IBM strength in Australasian network services -- especially in IP telephony, managed services and security, he said.
 
'It's not so bad being blue,' Hendry said. 'I'm quite excited ... If you think about it, if a leading organisation comes up and invests money, that's got to be good news.'
 
Phil Hassey, analyst and associate director of Asia-Pacific IT services at IDC, said IBM had got the Logicalis division for a good price. That arm of the company was likely to make $128 million to $130 million in revenue for the full year, he said.

Also, the acquisition of Logicalis was 'interesting' strategically and would put pressure on remaining network services players such as Dimension Data, Hassey said.
 
'IBM doesn't do these things lightly. It fills a pretty good gap for them in terms of the network space which [Logicalis] plays in,' he said. 'It's quite a smart little move.'
 
Also, business relationships between Telstra, Optus and IBM would change because IBM would now have the resources to play in its own name in the networking environment. Logicalis' strong relationship with networking hardware giant Cisco would also prove valuable to Big Blue, he added.
 
'Is this the start of something big in terms of IBM acquiring things?' Hassey asked. 'It fits quite neatly into their on-demand [strategy]. People are starting to realise that the network is very important to that.'
 
Logicalis' Hendry said that the news had been officially announced simultaneously across the companies, but he himself had been privy to 'conversations' around the takeover since late last year, he said.
 
Hendry said he could not reveal whether the Australasian arm of Logicalis had been doing well compared to the rest of Datatec as the parent company had entered a pre-financial results reporting 'quiet period'.
 
Logicalis Australia and New Zealand had similar aims and directions to the parent company, Hendry said.
 
Decisions about Logicalis' future direction, staffing, structure and so on under Big Blue rule were yet to be made, Hendry said.
 
The Logicalis Group -- which changed its name from Logical Networks in November 2003 -- is a UK-headquartered subsidiary of South Africa's Datatec group.