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BEA gets needed technology from Symantec

BEA Systems and an investment firm will buy Symantec's Internet tools division for $75 million and form a new company that will help create e-commerce software.

BEA Systems and an investment firm said they will buy Symantec's Internet tools division for $75 million and form a new company that will help create e-commerce software.

With the acquisition, BEA and Warburg Pincus Ventures get Symantec's Java development tool, called VisualCafe, and Web page design software called Visual Page.

The acquisition gives BEA the development tools it sorely needs to better compete against Microsoft, IBM, Sun Microsystems and others in the growing e-commerce software market. They all offer technology that lets companies build software that connects their customers, employees and suppliers to the Web.

BEA sells application servers that run this e-commerce software, but they didn't have the tools that help programmers build the software, said analyst Sally Cusack of International Data Corp.

"They were obviously lacking in the tools marketplace," she said. "This fills out an important gap and puts them on equal footing with companies like IBM."

The application servers made by BEA and others is software that acts like a traffic cop between Web browsers and back-end computing systems, such as databases. It runs the business software and handles transactions, such as a Web surfer's request to buy products online.

The move also fulfills a Symantec goal. The company, which specializes in antivirus software, had been trying to sell its Internet tools division since June, when it decided to concentrate on its more lucrative Internet security software and tools for managing and connecting mobile workers.

Earlier this summer, Symantec chief executive John W. Thompson said there was "no synergy" between its tools division and the rest of its products, and he announced plans to spin off the tools division.

Rather than take the tools division public, Symantec chose to sell it when BEA and Warburg expressed interest, a Symantec representative said today.

"We had originally planned on a spin-off where we'd be an investor. But this is a better solution for VisualCafe's customers, because they can benefit by having closer ties to BEA," the representative said.

Shedding the division to achieve a sharper focus makes sense, said Giga Information Group analyst Phil Costa. Symantec recently announced plans to make its security software available on the Web.

"Compared to its profits in virus software, the tools were just drops in the bucket, so they didn't get the attention they needed," he said.

The first tasks facing the buyers will be to find executives to run the new, unnamed software firm and to drum up additional investors, said Joe Menard, president of BEA's e-commerce server division. The 55 employees in Symantec's Internet tools division have been offered jobs in the new company, he said.

The market for such technology is tight. In the Java tools arena, Symantec's VisualCafe tool ranks second behind Microsoft. Symantec brought in $25 million in revenue, or 21 percent market share, while Microsoft generated $29 million, or 24 percent of the market, according to 1998 figures from IDC. Inprise placed third with 17 percent, and IBM was fourth with 5 percent.

BEA's Menard said the new independent tools company will acquire additional firms to give programmers all the tools they need to build e-commerce software.

Profits for software development tools have declined over the years as software firms have reduced the price of tools to make their overall product line more attractive and lure developers to buy their more expensive technology, such as databases.

But BEA sees a resurgence in software tools.

"We see the market for e-commerce tools taking off," Menard said. "The market for developing applications has changed in the last year. People used to buy SAP or these monolithic packaged applications. People have to be in e-commerce now and there are no applications to pick from. These tools are the only way to get these applications."

Costa said the new company will probably seek out more development software to round out its offerings. For example, the company can offer tools for bug testing, visual modeling and management of the development process, he said.

While Symantec has a popular Java development tool, it lacks the ability for teams of developers to work on a project together, a feature that tools from other companies have, Costa said. "They will have to broaden their portfolio of products to really have a viable business."