BluePhoenix Rides Legacy Modernization to Another Successful Quarter

Published: November 5, 2007

by Dan Burger

Legacy modernization software vendor BluePhoenix Solutions turned in record financial results for its third quarter ended September 30.

During the third quarter, BluePhoenix completed the acquisition of ASNA, one of the leading application modernization vendors in the System i market. Prior to the ASNA deal, BluePhoenix concentrated its efforts in the mainframe arena.

The company's had revenues of $23 million in the third quarter, which was an increase of 34 percent compared to $17.1 million in the third quarter of 2006. Revenues from the most recent quarter were also 9.4 percent higher than the $21 million in revenues that BluePhoenix garnered in the second quarter of 2007. This was the eleventh consecutive quarter of sequential growth for the company.

The ongoing financial success backs up the belief of Arik Kilman, the company's chief executive officer, that legacy application modernization is a growing market and that his company's products are on target.

"Our solutions continue to achieve broad market acceptance both amongst our customers as well as with our partners including market leaders such as Microsoft, Oracle, IBM and Sun," Kilman said. "The excellent results we have achieved reflect an increase in demand for legacy modernization as legacy maintenance and support costs continue to rise and as the workforce of available professionals constricts even further."

He also indicated that the company's acquisition strategy that brought ASNA into the fold in August will continue. Specifics regarding companies and markets that are under consideration for acquisitions were not disclosed.

At the time of the ASNA acquisition, Anne Ferguson, the owner and president of ASNA, noted that existing ASNA customers would benefit from the association with a larger company with deeper pockets and that specifically there would be an increase in services that back up the ASNA product lineup.

ASNA develops and markets visual programming and systems software for AS/400, iSeries, and System i servers. Its product list includes Visual RPG for .NET, an RPG compiler for building Web services and broader service oriented architecture applications; DataGate, for System i database access from Windows and .NET applications; and Monarch, a tool that automates the transformation of RPG programs or entire applications to the Microsoft's .NET programming model for Windows.

BluePhoenix paid $8.7 million (a $7 million cash payment and a $1.7 million dividend) to acquire ASNA, with an additional consideration to ASNA's shareholders if certain profit and revenue targets are achieved by ASNA, in 2007, 2008, and 2009.

RELATED STORIES

Services a Priority at ASNA after Merger with BluePhoenix

Mainframe Vendor BluePhoenix Ready to Purchase ASNA

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