Spyglass' stock price continued its dramatic rebound today on news that the
company intends to acquire a developer of Windows CE software for $11.3
Spyglass today said it was acquiring privately held Navitel, a developer of Windows CE-based
software for Internet-enabled telephones, in a stock only transaction.
After seeing its stock languish the last three months, shares in Spyglass rose another 29 percent in
midday trading to $17.6875. The stock has gained almost 52 percent from its
52-week low of $8.50, which the company hit earlier this month.
Spyglass said it will issue 1,250,000 shares to Navitel stockholders and
option holders, resulting in a transaction at approximately $11.3 million.
The transaction is expected to be completed within 15 days.
The acquisition follows one day after the company said it had signed a
three year, $20 million deal with Microsoft to help develop and integrate
Internet-ready applications for Windows CE device manufacturers.
Spyglass said today's deal would boost its capabilities in providing
telephony applications for Windows CE, which in turn would benefit its
ability to deliver on its contract with Microsoft.
"With the Navitel acquisition, Spyglass will gain significant expertise in
developing Internet enabling software and applications running on the
Windows CE platform," said Spyglass chief executive Doug Colbeth in a
statement. "This deal will help facilitate the development and integration
services that Spyglass will provide to Microsoft under the separately
announced $20 million strategic Internet solution agreements with
Microsoft," he added.
Microsoft deal could go beyond services
While the Microsoft deal is predominantly for engineering services,
Microsoft has also licensed unnamed Spyglass technology and is looking at
ways to boost the usability of Windows CE with the technology.
While Spyglass declined to confirm what technologies were being examined by
Microsoft, both the company's Web browser and its "Prism" software for
automatically converting Web content for viewing on handheld and other
devices could potentially play an important part in Microsoft's plans.
"We are working on a variety of different areas," including handhelds,
Internet phones, and other consumer electronics devices, said Randy
Littleson, vice president and general manager of Spyglass. Some of the
specifics about different projects-including specific technology licensing
arrangements--will be worked out over time, Littleson noted. Separate
announcements will come as those details are worked out-deals which could
further boost the company's earnings once products start shipping from
Microsoft has designs on moving
content from its MSN service to devices such as handhelds and smart
cell phones via wireless connections. It has also formed a new company with
Qualcomm, called Wireless Knowledge to provide
wireless data services.
In 1997, Spyglass became embroiled in
a dispute with Microsoft over whether or not Microsoft was keeping up
with royalty payments due to Spyglass for technology used in the Internet
Explorer browser. The issue was later settled when Microsoft offered a lump
sum payment to Spyglass for its technology.
"Despite that brouhaha, we have retained a good relationship with Microsoft
and worked on a variety of things," said Littleson. Littleson said the
company isn't worried that similar issues would arise with the current deal
because it is predominantly for engineering services, instead of royalties
based on product shipment numbers, like the previous deal.