Volume 15, Number 29 -- July 24, 2006

Kronos Buys Two Companies, Warns of Revenue Dip in Q3

Published: July 24, 2006

by Timothy Prickett Morgan

For years now, Kronos has been on an acquisitions tear and pushed for organic growth to dominate the market for time management and related human resource management software. To that end, Kronos has acquired two more companies, Unicru and SmartTime Software.

Unicru has carved a niche for itself in developing software that helps automate the process of analyzing job applications, and boasts that it has processed more than 22 million job applications. The software aims to cut down the time human resources departments and managers take to find and hire people, and says that it can cut that time down by a factor of 50 percent with its Talent Management System and, through analysis of employee applications using Unicru's Employee Selection Tools, cut down employee turnover by 10 to 30 percent by making sure you get employees that stick around. Kronos shelled out $150 million for Unicru, which has been growing at double-digit rates for the past several years and which will bring in about $50 million in sales for Kronos in its fiscal 2007.

SmartTime is a smaller operation, and Kronos did not specify how much it paid for this privately held firm, but did say that it paid cash. SmartTime is 21 years old and is a specialist in labor management software for manufacturers. Under this deal, Kronos is buying the labor management tools and hiring key personnel to support these products. The SmartTime site is Web gone now, except for its record in Google cache, so it is not clear what happened to the assets and people that Kronos did not acquire from SmartTime.

Presumably, both products will be woven into the Workforce Central line of applications from Kronos, which are supported on Windows and Unix platforms; the iSeries Central applications run on OS/400 and i5/OS and presumably will have hooks into the products from these acquisitions at some point, too.

Just days prior to these acquisitions, Kronos, which is publicly traded on the Nasdaq stock exchange, warned Wall Street that its third quarter of fiscal 2006 ended July 1 would be a little weaker than expected, with sales in the range of $140 million to $141.5 million. The company had been targeting $145 million to $149 million, and the revenue miss will cause it to shave a few pennies off its net earnings per share. Kronos is now saying that it will report net earnings in the range of 30 cents to 33 cents per share for the quarter. Kronos will report its results for the quarter officially on July 27.

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Editor: Timothy Prickett Morgan
Contributing Editors: Dan Burger, Joe Hertvik, Shannon O'Donnell,
Mary Lou Roberts, Victor Rozek, Kevin Vandever, Hesh Wiener, Alex Woodie
Publisher and Advertising Director: Jenny Thomas
Advertising Sales Representative: Kim Reed
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