Information Technology News
- IBM, Kingdee in software alliance
Date: 5-Jun-2007 Sources: (Shenzhen Daily)
IBM and Lehman Brothers have agreed to pay nearly US$17 million for 7.7 percent of Kingdee International Software Group, aiming to establish an alliance under which IBM will help the Shenzhen-based software firm redesign its products and expand globally.
Kingdee, which sells software to help businesses run more efficiently, said yesterday the partners would begin cooperating on sales within China initially, before expanding that distribution tie-up internationally.
IBM, which will get 3.85 percent of Kingdee by paying nearly half what its shares were last traded at, intends to help Kingdee by 're-engineering?its products to better suit a global market, according to a statement. IBM will also gain access to Kingdee's domestic sales channels.
The deal will raise the company's profile in the industry and in the professional investor community, Kingdee said.
IBM and Lehman have agreed to pay HK$132 million (US$16.9 million), or HK$3.7885 per share. Kingdee closed at nearly twice that at HK$7.03 May 28, before its stock was suspended.
China's nascent software market is projected to gallop ahead by about 10 percent annually and account for almost a quarter of Asian information technology spending of US$48.37 billion by 2010, excluding Japan, according to IT consultancy IDC, as corporations and government offices overhaul operations.
But the country now hosts hundreds of homegrown software companies, most of them small and unheard-of outside local markets.
SAP's chief operating officer said last year he believed a Chinese software maker could emerge in coming years as a more serious threat than even Oracle.
Kingdee, which SAP regards as its closest competitor within the world's fourth-largest economy, hopes to ride persistent growth at home while making forays into Southeast Asia and other overseas markets such as India or the Middle East.
It hopes to expand revenue 30 percent a year till 2010 and post at least a quarter of sales from abroad by then, versus about 5 percent now, executives have said.
Kingdee expects to nearly double overseas revenue annually over the next four years. To get there, it plans to start small in markets such as Singapore, Malaysia and Indonesia, now fragmented and housing no single dominant player, before marketing its services in more mature arenas of Australia and South Korea.
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