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IMRglobal looks for buyer as its earnings take a hit
By JEFF HARRINGTON © St. Petersburg Times, published February 1, 2001 CLEARWATER -- IMRglobal chief executive Satish Sanan late Wednesday said he is in advanced talks to sell the computer consulting company that he had nurtured into one of the Tampa Bay area's biggest businesses and a linchpin of efforts to make the region a technology hub.
Sanan and others involved with IMR-global would not talk about a likely sales price. But analysts predicted the company would fetch about $6 a share, or about $250-million. Founded in 1988, IMRglobal grew into one of the region's top 25 companies, with revenues of more than $250-million. It made its mark providing software to help business rid themselves of the infamous Y2K computer bug. After Y2K passed, the company reinvented itself as a consultant and provider of computer systems for select industries such as utilities and financial services. Sanan said the leading contender to buy the company intends to keep IMR-global's 400 bay area employees and its Clearwater headquarters and may even move the international headquarters to Clearwater. "They are not going to dissect the company and divide it and lay off a lot of people. Those things are very important to me," Sanan, who owns a third of IMRglobal, said in an interview with the St. Petersburg Times after his company issued a terse statement indicating only that it was seeking a "strategic partner." IMRglobal has been a crucial part of the economy in Clearwater, where it built an imposing headquarters complex. The city lured the company in 1998 with $1.8-million in financial incentives. IMRglobal planned to have three buildings constructed by 2001 and as many as 700 employees downtown. But so far, there are only two office buildings and about 400 employees. Told that the company may soon be sold, Mike Meidel, president of the Clearwater Regional Chamber of Commerce, said, "Oh, my goodness. That's the showpiece at the entranceway to our downtown." Even if IMRglobal remains largely intact, it would join a growing list of bay area companies that have been bought by out-of-town companies: Florida Power, Barnett Banks and Lykes Bros. Inc., among others. An IMRglobal sale also is potentially damaging to efforts to develop a high-tech corridor stretching from Pinellas County through Orlando. But it could be good news for the corridor if a sale winds up making IMRglobal stronger financially and its work force stays put. The revelation came as IMRglobal gave a sobering preview of its year-end performance. For the year, the company expects to post between 14 cents and 16 cents in earnings per share, not including a $3.7-million charge for an accounting change, on revenues of $256-million. It was expected to earn 37 cents a share. IMRglobal blamed a sharp fourth-quarter downturn in the e-business marketplace, primarily in North America, for falling short of analysts' expectations. "When things are great, I take the credit, and when things are bad, I take the blame," Sanan said. "That goes with the job." But it turns out that a sale was under consideration long before the fourth quarter, even as Sanan and other executives were publicly touting the company's prospects. IMRglobal's board agreed to hire a boutique firm last summer to quietly look for buyers or a cash infusion. "The board has been looking at what's going on . . . with the collapse of the ITs (information technology companies) and the dot-coms," Sanan said. "We have a $300-million company, and given the current market conditions, what are our options to achieve the dream, the vision we have to be a billion-dollar company?" Sanan founded the company in 1988 with three employees, 900 square feet of office space, a phone and a secretary. Providing expertise to fix Y2K glitches, the software company boosted revenues from $31-million to $170-million. Sanan's compensation package in 1998 soared to $54-million, making him the highest-paid head of a public company in Florida. After Jan. 1, 2000, though, he was forced into a costly and difficult makeover of his company as a computer system builder and consultant. It closed 1999 with a $30-million quarterly loss. IMRglobal is saddled with about $30-million in debt, much of it the price tag of reinventing itself. Sanan, who has a passion for horse farms, borrowed heavily from the company and still owed almost $5-million as of December. In recent months, problems multiplied. ING Barings analyst Brian Maimone changed his recommendation from "buy" to "hold," saying he is concerned about debt load and the ability to access cash. Joe Buttarazzi, an analyst with Adams, Harkness & Hill Inc. in Boston, said he was not surprised the company missed its profit targets but was surprised it missed by so much. Trading around $20 a share in May, IMRglobal joined other tech stocks in a 2000 meltdown. Shares closed Wednesday at $5.50, down 63 cents. Wednesday, Sanan acknowledged mixed feelings about selling. "I want to see it be a world-class company," he said. "In a way, I feel I have not been able to achieve that. . . . But then, you look at the company in the last 11 years and there are not many companies that have accomplished what we have accomplished." - Times staff writer Christina Headrick contributed to this report. Contact Jeff Harrington at harrington@sptimes.com or (813) 226-3407.
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From the Times Business report
From the AP
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