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New Era of Networks picks up SLI

Neon buys SLI International, an SAP partner, and reports earnings that beat Wall Street consensus estimates by a penny.

New Era of Networks is acquiring SLI International, an SAP R/3 integrator, in an effort to increase sales of its enterprise applications integration products.

Under the agreement, New Era of Networks (Neon) will acquire all of the outstanding shares of SLI for $22 million, plus an additional $3 million payable upon achievement of certain financial performance objectives, the company said.

The acquisition was announced along with the firm's first quarter earnings.

Income for the quarter ended March 31 was $3.7 million, or 11 cents per share, compared with $547,000, or 3 cents. A consensus of analysts surveyed by First Call expected the firm to earn 10 cents per share. Revenue was $29 million, compared $9.6 million for the same quarter a year ago.

Neon is one of a handful of companies in the so-called enterprise application integration (EAI) software market. EAI software is used to link legacy systems, client/server and Web-based applications, as well as enterprise resource planning (ERP) and database applications from Oracle and other software manufacturers.

Companies are pouring millions of dollars into trying to rework software to communicate with other systems. The integration software market is mushrooming, mostly to keep up with demand for tools that simplify the process of linking back-end systems to new e-commerce applications.

The acquisition of SLI is intended to make Neon a leader in the SAP consulting and implementation market, the company said. Based in Zurich, SLI is a business partner of SAP.

Neon's product suite supports EAI adapters for packaged applications, technologies, databases, Web interfaces, and network protocols.

SLI is a privately held company that reported revenue of $18 million over the past 12 months, with some 30 percent of sales coming from the United States. It claims 170 employees.