Loudcloud agrees to buy rival

[MARCH 4, 2002] - Loudcloud Inc., the Sunnyvale, Calif.-based hosting management services provider, last week signed an agreement to acquire smaller MSP rival Frontera Corp., Los Angeles. The acquisition is said to be an all stock deal, though details were not available at press time. Loudcloud officials said the deal should be completed by June.

Loudcloud, founded by former Netscape wunderkind Marc Andreessen and colleague Ben Horowitz, completed a public offering last March. The company quickly established a strategy of going after large enterprise clients willing to pay more than $1 million per year for its services. The Web infrastructure company's list of customers includes enterprises like automobile manufacturer Ford Motor Co., publishing giant Knight Ridder, and the government of the UK.

The Frontera strategy called for selling its services to much smaller corporations. The privately held firm says its customer base includes Pioneer Electronics, Conseco, Wherehouse Music and Coach, for example.

The Frontera deal represents not so much a shift away from Loudcloud's bigger-is-better strategy as an expansion of it, said Horowitz, Loudcloud's president and CEO. Horowitz said he expects the acquisition will bring in new smaller customers while expanding Loudcloud's regional reach. The acquisition "allows us to add high-quality customers, strengthens Loudcloud's regional presence and provides operational synergies," Horowitz said.

At the same time, Loudcloud reported revenues of $15.9 million for the period ending Jan. 31, up 79% from the year-earlier period and 11% from the previous three month period. Results for its fourth quarter and full year ended Jan. 31.

About the Author

John K. Waters is a freelance writer based in Silicon Valley. He can be reached at [email protected].