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| | The May Report: 2/3/2010: Bulletin: 1,200 person Initiate Systems purchased by IBM for undisclosed amount; more on the Meg Ryan, Kevin Bacon movie; SAVVIS expands data center
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| | February 3, 2010
The May Report: 2/3/2010: Bulletin: 1,200 person Initiate Systems purchased by IBM for undisclosed amount; more on the Meg Ryan, Kevin Bacon movie; SAVVIS expands data center
Editor and publisher: ron@themayreport.com, ronaldmay@aol.com, www.themayreport.com, 773-525-3944.
If you missed an article, go here: http://www.tmronline.com/A55951/tmrarticles.nsf/vwFullNewsletter
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TABLE OF CONTENTS
The Scoop section:
-- IBM buys Chicago health care tech firm Initiate Systems
-- Malachi Leopold: Update on Meg Ryan/Kevin Bacon movie
-- Leads to Chicago VCs
-- SAVVIS EXPANDS CHICAGO DATA CENTER
-- Lane JaBaay: Is Stephen Meade/was he considered a legitimate resource when he was in Chicago?
-- Advanced Diamond Technologies Publishes Etch Recipe for Diamond MEMS and Sens
[Editor's note: May here. I had my bone marrow biopsy and it was fine -- no pain -- and as usual I was sweating it with anticipation. I also saw the dentist after that (2 doctors' appointments in one day is one too many) and it turns out I have an abscess on my lower left gum and this could, I repeat could, be the cause of those low grade fevers. We'll see, but Dr. Purcell put me on ten days of Amoxicillin. They did numb me up pretty good at the biopsy and it took a while to wear off. The guy performing the procedure is a PA, nice Jewish boy from Toronto named Claude Herman.]
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The Scoop section:
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IBM buys Chicago health care tech firm Initiate Systems
http://www.chicagobusiness.com/cgi-bin/news.pl?id=36973&seenIt=1
IBM buys Chicago health care tech firm Initiate Systems
By: John Pletz Feb. 03, 2010
(Crain's) - IBM Corp. has taken a shine to Chicago, buying another local technology company.
The New York-based computer giant says it will purchase Initiate Systems Inc., which makes software used in coordinating data from different computer systems.
IBM didn't disclose the purchase price, but said it expects to close the transaction in the first quarter.
Initiate is best known for software used by medical providers and the insurers and governments that pay for care. Clients include CVS/Caremark, Humana Inc., Ochsner Health System, North Dakota's Department of Health and Human Services and the University of Pittsburgh Medical Center.
The 15-year-old company's profile and profits have been on the rise as the federal government has pushed for more widespread use of electronic medical records to cut down on treatment errors and reduce the cost of administering payments for health care. The effort got a $19-billion boost from the stimulus bill and is viewed as a big opportunity for technology companies such as IBM, which has a $4-billion health care technology business.
IBM estimates Initiate has about an 80% share in the market for software that can link individual patient records across various health care databases.
It was growth that led the company to sell to IBM, said Initiate CEO Bill Conroy. The two companies have partnered for about five years, and Initiate chose to sell to the larger company as it faced demand for a broader software platform.
"Our customers wanted more complete solutions," he said. "There were products we knew we wanted to build and needed to build, but we just didn't have the bodies. Our options were to do an IPO and use the capital to catch up with demand or do an acquisition. An IPO was a fall (2010) proposition, so an acquisition made sense."
Mr. Conroy said discussions with IBM took about two months.
Initiate was one of Chicago's more promising tech startups. It became profitable in 2008, posting annual sales of $74.4 million, and was among the 50 fastest-growing companies tracked by Crain's last year.
Mr. Conroy was named CEO of the Year in 2009 by the Illinois Technology Assn. The company was founded in 1995 and put together a diverse group of backers, including Blue Cross Blue Shield Venture Partners L.P., as well as data-storage company EMC Inc., and InQTel, the investment arm of the Central Intelligence Agency.
"We had investors who had been in the company for a while and probably were ready for a liquidity event, but we also have new investors who weren't so anxious," Mr. Conroy said.
But the sale of Chicago's Initiate to IBM represents the loss of another stand-alone technology company in a city where such companies are in short supply.
IBM purchased another Chicago company, software maker SPSS Inc., last year for $922 million. SPSS was founded in 1968 by three Stanford University graduate students who migrated to the University of Chicago's National Opinion Research Center to make software that helps predict human behavior. It became a publicly traded company with 1,200 employees and more than $300 million in annual revenue.
The purchase of Initiate further cements Big Blue's ties to Chicago, where it already employs about 3,800 workers and its presence dates back 100 years.
"The market's growing very quickly. As it continues to grow, we'll likely add resources," said Dan Pelino, Oak Brook-based general manager of IBM's global health care and life sciences business.
Initiate has about 350 employees, most of them in Chicago.
"It's going to be good for Chicago. We're going to get nothing but bigger," said Mr. Conroy, 50, who added that he will stay with the company.
Sponsored by
What do you think?
Leyla A. wrote:
In response to Martina, I don't see the problem with having contracted employees. I prefer to be a contracted employee, however, I would just like to be able to purchase a reasonable healthcare plan!
I would rather the government look into a proper healthcare option and leave IBM alone.
http://www.twitter.com/leyla_a
2/3/2010 12:30 PM CST on Chicago Business
Recommend Report Abuse
Martina L. wrote:
I feel for those 1200 Initiate employees. IBM likes to buy out the companies and then slave out the labor as contractors. They make their money by turning all employees into contractors and taking away their benefits. The government needs to take a closer look at what they have been doing for the last few years. The majority of the people they hire back as contractors. Another reason why there are so many people with out health insurance in this country.
2/3/2010 11:42 AM CST on Chicago Business
Recommend Report Abuse
Justin B. wrote:
Disagree, to the extent that I'd say the lead idea is that it's a positive for Chicago tech growth -- somewhat of an indicator that Chicago is a good breeding ground for solid tech companies with long-term growth potential.
But also agree insofar as it also seems to point to issues with developing businesses that are independently sustainable in the long term (SPSS, Initiate, and especially Motorola now). Motorola had a good run while there was little competition, but hasn't shown many signs of a sustainable position. Might be better off selling divisions to more sustainable buyers...although the root problem is probably the same and might prevent that as well. That battleship might unfortunately prove too difficult to turn or sell.
2/3/2010 11:40 AM CST on Chicago Business
Recommend Report Abuse
Jeff W. wrote:
Would be nice if the article provided insight into the fate of the 1200 Initiate employees (combined with IBM workforce, partially combined with minimal cuts, or significant cuts). Hopefully it will be minimal layoffs and wont impact the local economy. However, its good to see deal flow market thawing.
2/3/2010 11:23 AM CST on Chicago Business
Recommend (1) Report Abuse
M O. wrote:
"The Initiate sale to IBM represents the loss of another stand-alone technology company in a city where such companies are in short supply"
Burying the lead
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Malachi Leopold: Update on Meg Ryan/Kevin Bacon movie
Subject: update on Meg Ryan/Kevin Bacon movie
Date: 2/3/2010 1:21:09 P.M. Central Standard Time
From: malachi@LBRBProductions.com
To: RONALDMAY@aol.com
Ron-
Thank you for the write up in the newest "May Report"! I have to admit I had to look up what "nattily" dressed meant, but was pleased it was a compliment.
2 updates - it's a no-go on forwarding the script to you for the time being. However, potential investors interested in learning more are more than welcome to request a copy.
Second, I have until Monday to give this opportunity to Chicago; it's been extended from Friday until Monday.
One more thing - I got a remark last night which I've heard many times: "I'd love to do it but I don't really understand the movie business." To which I say, it's simple. It's just manufacturing a product and selling it to people who like that product. This product is Meg Ryan and Kevin Bacon being really really funny in a great new romantic comedy. The "manufacturers" of this movie have over $1.2B in box office sales in the course of their nearly 30 years in the industry. And because Kevin and Meg are doing the movie and because the script is great, there are already distributors who will sell the film.
We're just manufacturing a widget, and this widget is coming soon to a theatre near you!
Take care,
--
Malachi A Leopold
President & Executive Producer
Left Brain/Right Brain Productions, LLC
p 773.935.2434
m 773.332.6837
malachi@LBRBProductions.com
http://www.LBRBProductions.com
The Art of Business. The Business of Art.
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Leads to Chicago VCs
Subject: Leads to Chicago VCs
Date: 2/3/2010 12:50:34 P.M. Central Standard Time
From: ariel@awarenetworks.com
To: ronaldmay@aol.com
CC: tyogev@chicagobooth.edu
Hello Ron,
Perhaps you recall who I am, we met in previous tech meetings in the Chicago area, and I gave you my business card on these occasions.
I work in my own company, Aware Networks, where I develop mobile software for blogging, chat & news ( http://awarenetworks.com/applications.htm).
The reason I am contacting you is to help the son of good friends of ours, Tomer Yogev, who is about to graduate from the University of Chicago business school M.B.A. program. He wants to join a local venture capital firm and needs some introduction to these. With your vast network of contacts, I thought that you may be willing to give him a few leads on whom to contact in the Chicago area.
I suggested to Tomer to read The May Report, but thought that contacting you directly may also help find local leads. I am copying Tomer on this email, and look forward to hearing back from you.
Best regards,
Ariel
Ariel Pashtan
Aware Networks
+ 1.847.502.1023
www.awarenetworks.com
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SAVVIS EXPANDS CHICAGO DATA CENTER
Subject: SAVVIS EXPANDS CHICAGO DATA CENTER
Date: 2/3/2010 11:07:27 A.M. Central Standard Time
From: ed.longanecker@techamerica.org
To: ronaldmay@aol.com
SAVVIS EXPANDS CHICAGO DATA CENTER [Press Releases (UK Interest)]
02/03/2010 06:58:00 AM
The Press Association UK
:: PR Newswire, London, February 03. This press release is transmitted on behalf of Savvis, Inc..
CHICAGO, February 3 /PRNewswire/ --
- Electronic Trading, Thomson Reuters Collaboration and Hosting Demand Fueling Growth
Responding to growing customer demand in electronic trading and for access to financial markets and internet infrastructure services, Savvis, Inc. (Nasdaq: SVVS), today announced that it is expanding one of its two premier Chicago data centers.
(Logo: http://www.newscom.com/cgi-bin/prnh/20090803/PH55929LOGO )
To serve new and existing clients, Savvis will add approximately 10,000 square feet of raised floor space to its Cermak Road facility in downtown Chicago. The data center will subsequently feature 200 watts per square foot of power.
The expansion serves growing demand from financial customers interested in hosting their trading applications in close proximity to major derivatives markets via Savvis. Customers can also connect to the facility with world-class Ethernet network services, using Savvis' Exchange Express service.
Savvis' expanded Chicago facility will encompass approximately 30,000 square feet of raised floor and enable access to key execution venues, such as the CME Group, among others. It will also serve as one of the global delivery points for the Thomson Reuters Hosting Solution, which is initially being offered in six Savvis data centers (announced October 5, 2009).
The expanded facility offers a full portfolio of technology-agnostic managed hosting and network services, including colocation, virtualized utility services and managed security services, in addition to proximity hosting. Customers will also be able to take advantage of Savvis' Application Transport Network (ATN), which enables optimized network performance, scalability and delivery.
"Chicago is an important financial center, and we are pleased to meet existing demand and expand our proximity hosting and IT infrastructure services on East Cermak," said Varghese Thomas, global head of financial services for Savvis. "The financial services industry is increasingly moving toward converged solutions featuring high-availability application hosting and world-class network access for the leading global trading venues and liquidity pools across all asset classes."
The expanded Chicago data center adds to Savvis' existing portfolio of managed IT infrastructure services for the financial industry. Savvis offers secure, high-availability, direct connectivity to hundreds of exchange feeds and other execution venues around the world, such as NASDAQ(R), BATS Global Markets and the London Stock Exchange. For more information on Savvis financial services visit http://www.savvis.net/financial.
Savvis currently operates 28 data centers globally, with more than 1.4 million square feet of high-quality, raised floor space, which is designed to support enterprise IT operations. In addition, Savvis is positioned as a leader in the Gartner Magic Quadrant for Web Hosting and Cloud Infrastructure (on Demand), 2009 http://www.savvis.net/magicquadrantleader.
About Savvis
Savvis, Inc. (Nasdaq: SVVS) is a global leader in outsourced internet infrastructure services for the enterprise. More than 4,000 customers, including 40% of the top 100 companies in the Fortune 500, use Savvis to reduce capital expense, improve service levels and harness the latest advances in cloud computing. For more information about Savvis, visit http://www.savvis.net.
Savvis Forward-Looking Statements
This document may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from Savvis' expectations. Certain factors that could affect actual results are set forth as risk factors in Savvis' SEC reports and filings, including its annual report on Form 10-K and all subsequent filings as well as the risk that potential product cost and performance benefits may not be realized for any particular customer. Savvis assumes no obligation to update or supplement forward-looking statements.
Carter Cromley of Savvis, Inc., +1-703-667-6110, carter.cromley@savvis.net; or David Friedman of Ogilvy PR Worldwide, +1-303-634-2674, david.friedman@ogilvypr.com
PR Newswire Europe Limited 2010
Best regards,
Ed Longanecker
Executive Director, Regional Director of State Government Affairs
TechAmerica Midwest
NEW PHONE: 630-282-4332
ed.longanecker@techamerica.org
www.techamerica.org
AeA & ITAA have merged to form TechAmerica
Where the future begins
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Lane JaBaay: Is Stephen Meade/was he considered a legitimate resource when he was in Chicago?
Subject: Re: Lane, is it Lynn Weems or Len Weems or something else?
Date: 2/3/2010 10:17:42 A.M. Central Standard Time
From: lane@lanejabaay.com
To: RONALDMAY@aol.com
Hey Ron... his name is Len Wein.
and, I wanted your opinion on something. We realize that in addition to pursuing potential investors in Chicago...we need to identify organizations on the west coast as well. Do you know of any organizations similar to BNC on the west coast?. I googled Stephen Meade and went to the website of the organization he is running out there... do you know anything about them? Is he/was he considered a legitimate resource when he was in Chicago?
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