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IMRglobal CEO must hope that his latest bet pays off

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By ROBERT TRIGAUX

© St. Petersburg Times, published February 23, 2001


"You win some, you lose some."
-- Satish Sanan, CEO and founder of Clearwater's IMRglobal Corp.

Sanan offered that philosophical tidbit after watching Fusaichi Pegasus win the Kentucky Derby last spring. Two years earlier, Sanan offered $3.8-million in a failed auction bid for the promising horse.

Sanan might keep the same remark ready -- just in case -- following Wednesday's announced $438-million deal to sell his IMRglobal computer consulting company to Canada's largest information technology firm.

When it comes to high-priced horse bets and corporate acquisitions, that one-liner can handily cover just about any outcome.

Sanan's IMRglobal got rich off the Y2K crisis in the late '90s. But after millennium bug fears passed, the young company never quite found its place as a mainstream computer consulting firm. Its stock, which traded over $19 a share last spring, trickled south to a December low of $2.38. Now it hovers near $6 a share (down 9.5 percent Thursday).

The story behind IMRglobal's buyer, the larger CGI Group in Montreal, has a similar ring to it.

Slumping demand for information-technology services caught CGI off guard in fiscal 2000, hammering revenues and earnings. CGI's stock, which approached $18 a share a year ago, has declined steadily. And it continued to fall after Wednesday's unveiling of the IMRglobal deal, dropping from $5.60 before the announcement to Thursday's close of $3.96.

At CGI's annual shareholders meeting last month, CGI president Serge Godin busily reassured investors that the company is making a recovery, even as the North American economy heads into a slowdown.

"I must candidly say that at this time last year no one at CGI -- or in our industry -- foresaw the sudden drop in demand that materialized in 2000," he said. "We expected to see uninterrupted growth because IT services are so strategic to organizations."

Echoed Sanan about IMRglobal last month: "We were not able to maintain the same level of performance during the fourth quarter due primarily to the decline of e-business and an overall economic slowdown."

Now two weakened companies in financial lockstep must combine and make something better than the sum of their parts.

CGI had long promised a bold move into the U.S. market. IMRglobal is CGI's biggest acquisition in a series of 30 purchased companies over the past 15 years. The IMRglobal deal will more than double CGI's U.S. work force to more than 3,000.

Wednesday's deal is also a tale of three companies, not two. Bell Canada holding company BCE Inc. of Montreal owns 44 percent of CGI and remains the company's largest customer.

And it just so happens that CGI's Godin and IMRglobal's Sanan share more than CEO titles, computer expertise and wealth (Sanan stands to get $120-million for his stake in IMRglobal, and Godin's personal fortune of $365-million ranks him among Canada's top 100 richest, says Canadian Business magazine.)

Both are crazy about racing horses. And each is happy to spend megabucks to play in the high-stakes equestrian world.

Sanan jumped into the elite horse scene in the late 1990s. He quickly bought a 600-acre Ocala area horse farm, dubbed it Padua Stables and, with an experienced partner, began spending sums startling even in horse circles to fill Padua with young and expensive colts with racing pedigrees. Approximate Sanan investment in his horse hobby: $100-million.

So far, the results of such rich investing have not impressed some Kentucky horse wags.

"It's a pity, then, that the man who helped debug the world could not debug his thoroughbred racing operation," a Louisville Courier-Journal racing columnist wrote last spring. "Your home computer runs better than Satish Sanan's 3-year-olds. The driving force behind Padua Stables arrives at the 2000 Kentucky Derby with 30-1 shot Exchange Rate and an underachievement virus afflicting his pricey array of horseflesh."

Racing under the name of Ecuries NDG, CGI's Godin is a bit more mysterious. But Godin leans toward harness racing. Last year, he held title to 3-year-old Uhadadream, which equaled the world record for sophomore geldings in an elimination heat at the Meadowlands in New Jersey. Godin is described as "notoriously publicity shy," even to the point of declining to enter the winner's circle after his horses win.

In Montreal, Godin is known at annual meetings to hand out electronic translators to his English-speaking employees before addressing them in French.

Here's hoping Monsieur Godin will take as much care to keep his new Clearwater operations in the corporate loop.

Short takes

Did California's bungled deregulation of its electricity market find a new victim? In Tallahassee, Florida senators are balking this week at recommendations by a Gov. Bush-appointed energy commission to open the state to merchant power plants built by out-of-state companies. The biggest sticking point: Why let Florida utilities that built plants with customer money suddenly sell off those assets at their depreciated value but then let the power those plants generate be sold at market value? Don't expect quick action on anything that alters the electricity scene in the state ...

Executive pay's still on the upswing at troubled Danka Business Systems, but the St. Petersburg company's credit ratings are heading south. Again. Standard & Poor's cut Danka's credit ratings to low junk bond status just one day after the photocopier distributor said it will swap $200-million in outstanding notes for new notes that are worth less than the original. S&P cut its Danka four notches to "CC" from "B-minus." ... Credit (or blame) Disney's FastPass service for Universal Orlando's decision this week to launch a new three-tiered ride-reservation system. It's supposed to ease visitor complaints of long lines. But it's really just another sign of the customer caste system being adopted by more and more U.S. businesses. Universal Express offers three levels of service catering to on-site hotel guests, multiday-pass holders and people who buy only a single-day admission. That's no different from airlines offering preferred service to folks who fly a lot. Or from banks taking the phone calls of wealthier customers ahead of average consumers who feel they are "waiting for the next available representative" forever ...

- Contact Robert Trigaux at trigaux@sptimes.com or (727) 893-8405.

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