Insight Enterprises to acquire Software Spectrum from Level 3

By on
Insight Enterprises to acquire Software Spectrum from Level 3

Insight Enterprises has agreed to purchase Software Spectrum from Level 3 Communications for about $287 million in cash, according to the companies..

Insight Enterprises has agreed to purchase Software Spectrum from Level 3 Communications for about US$287 million in cash, according to the companies.

In addition, the solution provider reported a 6.4-percent increase in revenue to US$837.1 million for the second quarter ended June 30 and a 104-percent increase in net income to US$25.9 million, or 39 cents per share.

Analysts had expected earnings of 32 cents per share, according to Thomson Financial/First Call.

Software Spectrum specialises in software and mobility solutions for medium and large-sized companies. The acquisition is expected to close by September, according to Insight executives.

"Over the last 18 months, we have focused on moving beyond price, availability and product selection to become a trusted advisor to our clients," said Rich Fennessy, CEO of Insight, during a conference call with analysts Thursday. "Today's announcement strengthens our capabilities in software and wireless and help fuel growth in our services business."

The acquisition significantly increases the size of Insight, which reported US$3.2 billion in sales last year. Software Spectrum employs about 1,300 people in 24 countries. It reported about US$1.9 billion in revenue in 2005, but the figure would be US$1.4 billion under Insight's reporting structure, which counts maintenance contracts differently than Software Spectrum, according to Insight.

Software Spectrum reaches 290 of the Fortune 500 companies and offers applications from 3,700 publishers, Fennessy said. It is Microsoft's largest reseller of enterprise software in North America, according ot Insight.

While hardware now accounts for about 86 percent hardware, the mix will change to 60 percent hardware, 39 percent software and 1 percent services after the acquisition, Fennessy said.

"The vision these two companies is very much aligned. We believe we will be able to significantly grow our services business as well," Fennessy said. "No other resellers has a greater breadth or depth of products and services, and geographic coverage, after this acquisition."

Software Spectrum has a strong business integrating business applications on mobile devices such as Blackberries, Fennessy said. "Insight sees tremendous opportunity" in that area, he said.

Level 3, an Internet infrastructure provider, had purchased Software Spectrum along with Corporate Software in May 2002. The company did not explain why it sold Software Spectrum.

"We are pleased that we have reached this agreement with Insight and believe both Software Spectrum's and Insight's customers will benefit from the transaction," said Charles C. Miller III, executive vice president and vice chairman of Level 3, in a statement. "Level 3's communications business is presenting numerous investment and growth opportunities. The proceeds from the sale of Software Spectrum will increase Level 3's ability to pursue those opportunities that are more central to our communications business."

Insight North America sales grew 7.9 percent to US$721.7 million from US$669.1 million in the year-ago quarter.

Got a news tip for our journalists? Share it with us anonymously here.
Copyright © 2010 Network IT Week

Most Read Articles

Log In

  |  Forgot your password?