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Quest swallows Sitraka

Targeting what promises to be a growth market, Quest Software finalized its acquisition of Sitraka Inc. this month, putting itself squarely in the J2EE application management business with an established line of products. Irvine, Calif.-based Quest, which was founded in 1987 and went public in 1999, built its business with a line of database tools that successfully took on the likes of BMC Software and the former Platinum Technologies, now part of Computer Associates.

The Sitraka purchase ''is a nice revenue booster for us,'' said Juli Ackerman, Quest's VP of business development and acquisitions. ''We look to invest both through acquisition and organically in high-growth markets. Some things that were high growth for us before have leveled out, so we're continually evolving and asking, 'How do we grow from here?' The other acquisitions we've done were smaller; in this case, we're buying an established company and market leader in their space,'' she explained. Quest paid $51.7 million in cash for Sitraka.

Sitraka, formerly the KL Group, is a profitable business, according to CEO Greg Kiessling, now Quest's VP and managing director of J2EE solutions. Founded in 1989, Sitraka was a privately held company based in Toronto, with about 200 employees and approximately 5,000 corporate customers. Sitraka's products include JProbe and PerformaSure, which provide performance analysis, root cause diagnostics and resolution capabilities. ''JProbe has over 15,000 individual licenses,'' said Kiessling. ''Our customers tend to be relatively sophisticated Java developers, primarily building on BEA or IBM WebSphere application servers. We have a long record of profitability as a company.''

Kiessling said Sitraka was looking for external financing to build a field sales organization when JP Morgan brought the company to Quest's attention. ''They were looking to extend their products into areas where we have software, such as monitoring, so it was a perfect fit,'' said Quest's Ackerman.

Quest, which provides solutions for database management, high availability, application monitoring and Microsoft infrastructure, plans to integrate PerformaSure with its Foglight enterprise application monitor as the first order of business, said Ackerman. 'We were already building Foglight cartridges' for J2EE, but the acquisition ''gets us much further,'' she said. Quest will be determining other integration points that make sense, said Ackerman, such as adding the likely addition of Sitraka's J2EE capabilities to Quest's line of products for Oracle database developers. In the meantime, the Quest sales force will begin selling Sitraka products in January. According to Ackerman, Sitraka will remain in Toronto under the Quest name, and Quest has 'no immediate plans for laying anybody off.'

For the first nine months of 2002 (ending Sept. 30), Quest reported revenue of $186 million and net income of $6.9 million, compared with $187 million in revenue and a net loss of $38.6 million for the same period in 2001. In 2001, Quest reported revenue of $245 million for the year, a 48% increase from 2000. For the three years prior, however, Quest had grown revenue at 90% and better. According to Gartner Group, the network and systems management (NSM) market shrank 5% in 2001. Quest was among the companies that bucked this trend, according to Gartner data; other NSM companies reporting growth during this period included NetIQ, Swan, OPNET, Motive and Supportsoft.

About the Author

Colleen Frye is a freelance writer based in Bridgewater, Mass.

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