Peregrine Buys
Harbinger Corp.
For $920 Million
Rumors that Cisco Systems was in the hunt to buy San Diego-based Science Applications International Corp. at a fat profit were so pervasive the local tech firm issued an internal denial earlier this month.
The rumor had some credibility since San Jose-based Cisco is a customer of SAIC and has been on an acquisition binge in recent years.
This year alone, Cisco has acquired a dozen companies and since 1993, the number is more than 60. In addition, the company has set aside some $10 billion for purchases.
Yet the rumor isn’t true, according to an internal memo sent by SAIC chairman Bob Beyster to managers June 14.
“So I am asking each of you to help me by forwarding this message to our employees and assuring them that there are not now, nor have there ever been, any discussions with Cisco regarding its acquisition of SAIC or Telcordia Technologies (a wholly owned subsidiary of SAIC) at any price,” Beyster said in the memo.
The prices offered SAIC, according to messages posted on some Internet message boards, reached more than $140 per share, or nearly five times SAIC’s most recent stock price of $30.25.
Employee-owned SAIC isn’t traded publicly, but has privately traded stock that is valued on a quarterly basis using a complex formula. The values are set to allow SAIC employees to trade their shares.
SAIC, with $5.5 billion in revenues for its last fiscal year ended Jan. 31, is the largest high-tech research and development employee-owned firm in the nation. It has 40,293 employees worldwide, including 4,500 working in San Diego.
Cisco, which had about $12.2 billion in revenues last year, has more than 30,500 employees worldwide.
– – –
Peregrine Completes Deal: San Diego-based Peregrine Systems, a maker of management software, completed its acquisition of Atlanta-based Harbinger Corp. June 19 following approval of both companies’ shareholders.
The deal that was announced in March and originally valued at $2.1 billion ended at about $920 million, according to one published report.
The battering of Harbinger’s stock since the agreement, dropping from more than $40 to less than $20, resulted in the price Peregrine paid to less than half of its original estimate.
Peregrine exchanged three quarters of a share for each share of Harbinger stock and issued 36 million shares for the purchase.
Wireless Parts Maker Sales Zoom: RF Industries Ltd., a San Diego-based designer and manufacturer of components used in the personal communications and radio communication systems, reported second quarter net income of $281,000, up 78 percent from the same quarter a year ago, on sales of $1.9 million.
For the first half ended April 30, RF Industries earned $502,000, up 72 percent from the like period last year. Revenues were $3.6 million, 29 percent better than last year’s first half.
President Howard Hill attributed the big sales run-up to operating in a particularly hot industry , wireless communications.
“We’ve been doing our homework and designing some excellent products that are used in the wireless industry,” he said.
Current backlog for the company that was recapitalized in the early 1990s and is traded on Nasdaq small cap market is $7.7 million, nearly double the backlog of $4.5 million a year ago, Hill said.
RF has two divisions, coaxial cable and telemetry, with the former generating the bulk of sales. It has 45 employees at its Miramar headquarters, while it contracts for the manufacturing in San Diego, Taiwan, Korea and Tijuana.
– – –
Tale Of Two Analysts: Qualcomm Inc. stock hit near its yearlong low June 15 when it dropped to $61.44 following reports that one analyst downgraded QCOM to a hold and put a 12-month price target of $50. In January, it was at $200.
Edward Snyder, an analyst with Chase H & Q; in San Francisco, cited a slowdown in handset sales in South Korea, a big market for CDMA, that could reduce Qualcomm’s sales between 10 to 15 percent this year.
But another analyst disagreed.
Mark Roberts of First Union Securities said there is no evidence of any global slowdown in demand for handsets, even if there was a reduction in South Korea.
Roberts advised his clients Qualcomm is on target for annual earnings of $1.11 per share, and repeated his “strong buy” recommendation.
Raising Capital: MassHysteria Inc., a San Diego application service provider, said it raised $2 million in financing from Newlight Associates, a private investment firm that specializes in early-stage tech companies.
MassHysteria said among its clients in recent months are AOL, Intel, and the National Basketball Association, but it also has been working with Gateway, Qualcomm, and Peregrine Systems, all local firms.
The company focuses on content strategy and real-time publishing services, and E-commerce expertise.
– – –
USIU Puts Program Online: United States International University is making its master of arts in education program available globally through an online service. Jerry Miller, USIU’s director of distance education, said, “The ultimate goal driving this initiative is to establish online learning communities that are convenient, collaborative and self-paced, while encouraging interaction with other professionals around the world.”
Helping the university implement the program is Denver-based eCollege.com.
Send items with a financial high-tech slant to mallen@sdbj.com.
