Andersen Consulting, Microsoft Form New Firm

In a deal worth about $1 billion, Andersen
and Microsoft Corp.
Monday formed a new firm to offer enterprise platform services on Windows

Microsoft (MSFT)
will contribute $385 million cash as well as solutions development support
and other intellectual capital to support Avanade, the new company. Andersen
Consulting will provide intellectual capital, training, resources and other

With headquarters planned for the Seattle area, Avanade, which will be
co-owned by Andersen Consulting and Microsoft, will develop
reusable e-commerce applications, Windows DNA development, application
integration and enterprise and Web infrastructures.

Within the first 24 months, Avanade will hire more than 3,000 technologists with expertise in Microsoft’s products. Mitchell
C. Hill, an Andersen Consulting partner with more than 20 years’ experience
with the firm, will be Avanade’s chief executive officer. The board of
directors will comprise executives from both organizations, including Jack
Wilson, managing general partner of AC Ventures, John Connors, chief
financial officer at Microsoft, and Paul Maritz, group vice president,
developer group at Microsoft.

In addition to its Seattle location, Avanade plans to open offices in San
Francisco, Dallas, New York, Paris, London, Sydney, Sao Paulo and Singapore
in the next 18 months. Plans also call for taking Avanade public at some
future date.

“The Internet creates unparalleled potential for customer and supplier
intimacy through new business models,” Hill said. “Avanade will help
customers realize this potential by providing large-scale, highly reliable
e-commerce applications based on the Microsoft Windows 2000 platform. Our
skills will be coupled with the business and technical expertise of Andersen
Consulting and Microsoft to increase speed-to-value for our clients.”

Microsoft and Andersen also expanded their previous alliance to allow about
25,000 Andersen Consulting professionals to receive enhanced training on
the Microsoft enterprise platform, including Windows 2000, Microsoft SQL
Server, Exchange Server, e-commerce technologies, Windows DNA 2000 and
Visual Studio development system-based tools.

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