Vendors like EMC
said its board of directors has unanimously decided
to spin off its disaster recovery business and take it public through a
tax-free distribution of shares.
SunGard, of Wayne, Penn., said the split will help the company
streamline its focus, which will lead to better performance for each entity
The company’s software and processing business earned $1.8 billion, or 60
percent of the entity’s revenue, in 2003. SunGard Availability Services,
which provides managed hosting, storage, information security, records
management and disaster recovery, earned $1.2 billion in 2003.
Should the spin-off be approved, SunGard Availability Services will retain
the SunGard name and brand, as well as the more than 2,000 workers and 3
million square feet of facilities in 60 locations.
Disaster recovery is burgeoning as a field because enterprises the world
over are looking to shore up the defense of their data, which is threatened
by natural and synthetic calamities.
and other providers of storage use such opportunities to sell
information protection technology products, such as replication software.
SunGard officials said in a conference call they still anticipate income per
share in the range of $1.37 to $1.42 for 2004.
“We expect the separation of the businesses to have a positive impact on
revenue growth over time,” said Cristobal Conde, SunGard’s president and
CEO, on the call. “This spin-off is about creating two
strong, independent companies positioned for growth. It’s not about
cost-cutting or downsizing. The focus is on growing and creating shareholder
The spin-off is expected to be completed by the end of the first quarter of
2005, pending the receipt of a favorable ruling from the IRS or an acceptable tax opinion.
Should it succeed, James C. Simmons, currently group CEO
of SunGard Availability Services, will become president and CEO of the spin-off.
Michael J. Ruane, currently CFO of SunGard, will become
CFO of the spin-off. Vice President and Controller
Andrew P. Bronstein will succeed Ruane.
Vendors like EMC