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Preview Systems Enters Wind Down Mode

Caving in to the stringent technological demands of crafting digital products, software maker Preview Systems Inc. called it quits Friday and sold its electronic software distribution (ESD) business to Chicago's Aladdin Knowledge Systems for $5 million in cash.

Sunnyvale, Calif.'s Preview, which said in February that it was looking for alternatives and intimated May 8 that it was angling for bidders to pick up some of its assets, chose security software provider Aladdin to help satisfy its customer base in the winding down of its operations. Like Preview, part of Aladdin's vision includes improving secure digital goods distribution across the Web for e-commerce purposes.

With Preview's ESD suite, Aladdin will inherit the ZipLock (flagship digital goods e-commerce enabler), Vbox (creates trial versions of software apps to give customers a "try-before-you-buy" option) and PortableStore (brings secure digital goods to CD-ROM, DVD-ROM or OEM hard drive) product lines in addition to a customer base of software developers.

Known for its development of commerce platforms and services for the online distribution of digital goods, Preview is currently negotiating the sale of its remaining assets, electronic music distribution capabilities and other digital products. The firm plans to return remaining capital to stockholders. It projects its cash and marketable securities will be between $65 million and $66 million at the end of the second quarter, excluding any proceeds from asset sales.

As it is expected that Preview Systems' products will improve Aladdin's Privilege electronic licensing system, the two outfits will combine efforts to propel research and development, customer support, sales and marketing for their electronic distribution products going forward. At the end of the second quarter of 2001, Preview Systems will employ approximately 30 people, of which 20 are expected to be retained by Aladdin upon closing of the transaction.

Vincent Pluvinage, chief executive officer and president of Preview Systems, said he has known for a while that his company's products would be more commercially viable when aligned with another, larger firm.

"Because the overall market has evolved more slowly than originally forecasted, our solution may be more viable as a product line of a larger company than as a stand-alone public entity," Pluvinage said Friday in a public statement.

Pluvinage has been invited to join Aladdin's global advisory board.

The firms expect the agreement, which is subject to Preview shareholders' approval, to close in July.



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