RealTime IT News

USi Secures $300M; Partners With Microsoft

Leading ASP USinternetworking Inc. announced Monday night (Nov 13) that it has signed commitments for over $300 million in equity and commercial credit facilities from financial and strategic investors and lenders.

This much-needed capital will carry USi through to cash flow breakeven some time in 2002, USi's CEO Andy Stern said today. Of the $320 million total, $103 million is available immediately, $50 million is available in a revolving credit account, and the remainder is on standby for USi to draw on as needed, Stern said.

USi hit its 52-week low of 2.25 in early November following third-quarter results that left investors wondering when and how USi was going to supplement the $81.1 million cash it had on hand. USi closed up 33 percent on Tuesday at 5.00.

Microsoft led the charge with a $50 million investment and a strategic alliance with USi to develop, deliver and market managed applications services built on the Windows 2000 and .NET platforms. USi will market these new services to a broad range of enterprise customers. The first of these services will be available in December 2000, with additional services being released through May 2001. USi will make Microsoft's software the primary platform for such managed applications services.

"Microsoft has delivered some new technologies we feel very positive about," Stern said. "Commerce Server 2000 and Exchange Server 2000 are some of the enhanced products our customers are demanding."

The alliance builds upon USi's successful Microsoft Exchange-based messaging and collaboration service and includes joint commitments to deliver enterprise line-of-business applications in USi's iMAP portfolio like Siebel, PeopleSoft, Lawson and Ariba; commerce services; and managed infrastructure services built on SQL Server 2000 and the Microsoft platform.

USi has agreed to make Microsoft's technology platform the primary platform for all of its iMAP product offerings and Microsoft has agreed to provide USi with substantial engineering and technical support to launch the new marketing offerings and migrate existing service offerings to the Microsoft Platform. USi and Microsoft have also agreed to conduct extensive joint marketing and sales initiatives aimed at promoting USi offerings to targeted customers beginning in February 2001.

Microsoft has been courting USi for over a year, but circumstances this time made it right, according to Stern. "The confluence of the broadened technology offering from Microsoft, coupled with our sense of the market made this work."

Microsoft invests strategically in several service providers in broadband, mobile data, hosting and ASP services, including Corio and Digex. This is the software giant's largest investment in a "pure-play ASP," said Mark Chestnut, general manager of Microsoft's Network Solutions Group.

"This is a significant event for the industry," Chestnut said. "In the next few months, we expect to see new hosted commerce applications based on Commerce Server 2000 and BizTalk, database applications based on SQL Server 2000, and enhanced messaging and collaboration applications based on Exchange Server 2000." Microsoft's investment gives it an 11 to 13 percent stake in USi after this round of investments.

Also announced Monday was a $10 million strategic equity commitment from wireless data products and services provider Aether Systems (Nasdaq: AETH) as part of a strategic alliance to jointly develop and deliver wireless-enabled managed application services to the enterprise market.

The first joint offering - anytime wireless email and messaging services for Microsoft Exchange via Blackberry by Aether service - is available immediately. This service includes solution planning, application service provisioning, wireless connectivity, device fu