SHORT TAKES

CVC & FRANCISCO PARTNERS BUY SOME AMI

San Diego, CALIF. -≠ GA-TEK (a wholly owned subsidiary of Japan Energy Corp.), American Microsystems Inc. (AMI), Francisco Partners and a Citicorp Venture Capital unit (CVC) announced a definitive agreement in which Francisco Partners and CVC will acquire approximately 80 percent of the AMI business from GA-TEK, with an enterprise value of more than $525 million. GA-TEK will retain approximately 20 percent and will also be granted a warrant to purchase an additional 10 percent. The parties anticipate completing the transaction before the end of calendar year 2000. “We are extremely excited about our investment in AMI. AMI has a strong track record of growth and profitability, a world-class customer base, and an outstanding management team. Those factors, along with its strength in the application-specific integrated circuit (ASIC), mixed-signal ASIC and field-programmable gate array (FPGA) conversion markets squarely position the company to capitalize on the fast growth in the semiconductor sector,” said Dipanjan Deb, a partner of Francisco Partners.

Chip Schorr, a partner of CVC who, along with Deb, will join AMIπs board of directors, added, “Our investment will stimulate growth opportunities that will further differentiate AMI as a leading player in its markets. We are excited to contribute to, and participate in, AMIπs achievement of dramatic growth and financial success.” AMI is a pioneer in the design of mixed-signal (mixed analog/digital) ASICs and has been manufacturing them for more than 30 years. AMI is a leading designer and manufacturer of ASICs it converts from FPGAs and other-vendor ASIC designs. The company also offers a complementary line of digital ASICs, all of which are used in a broad range of applications in end-markets that include wireline and wireless communications, industrial, computing, automotive, military, consumer and medical markets. AMI has developed proprietary technologies, design tools and methodologies, and also provides silicon manufacturing. AMI had 1,863 employees as of Nov. 30, 2000, and generated net sales of more than $370 million over the last 12 months. “This transaction represents an excellent opportunity for AMIπs customers and employees,” said H. Gene Patterson, president and CEO of AMI. “Francisco Partners and Citicorp Venture Capital both have a track record of helping management create value in their portfolio companies. AMI gains two outstanding partners with whom we can continue to successfully pursue our business strategies.”

Francisco Partners, a private equity firm focused on buyout and recapitalization investment in technology companies, was formed by David M. Stanton, Sanford R. Robertson, Benjamin H. Ball, Dipanjan Deb and Neil M. Garfinkel. Francisco Partners targets public companies, divisions of public companies and private companies with transaction values ranging from $50 million to in excess of $2 billion. The principals of Francisco Partners have amassed an exceptional track record of investing in technology companies that span various industry sectors, investment sizes, growth profiles, capital structures and structuring complexities. In total, the principals have made substantial investments in over 20 technology companies, including several of the most successful technology buyouts ever done. Their investments include the purchase of Globespan, Inc. and Paradyne from Lucent Technology; the purchase of Legerity from Advanced Micro Devices; the purchase of XcelleNet from Sterling Commerce; the purchases of GT Com, Zilog, and the $1.8 billion purchase of ON Semiconductor from Motorola. In addition to its internal resource base, Francisco Partners has an exclusive long-term relationship with Sequoia Capital, one of the most prominent and successful venture capital firms in Silicon Valley. Founded in 1972, Sequoia Capital has provided early stage capital to over 350 technology companies including 3Com Corp., Apple Computer, Cisco Systems, Inc., Vitesse Semiconductor, Applied Micro Circuits, LSI Logic Corp., Oracle Corp., PMC Sierra, Scient Corp. and Yahoo! Inc.

EMC BACKS FOURTH-QUARTER FORECASTS

Buenos Aires — EMC Corp., a top data-storage company, said it expects fourth-quarter revenue to accelerate and is comfortable with Wall Street forecasts for fourth-quarter earnings growth. Mark Fredrickson, an EMC spokesman, said comments earlier Wednesday by EMC Chief Executive Michael Ruettgers, about a pick-up in fourth-quarter growth, stemmed from a misunderstanding of a question posed by a Reuters reporter. “We have in fact projected an acceleration in revenue growth during the fourth quarter,” Fredrickson said. “So it will be beyond the 34 percent we did in the third quarter.” The current Wall Street consensus is for fourth-quarter revenue to grow by about 36 percent from a year earlier, to $2.56 billion, he said. In the third quarter, net income grew 55 percent while revenue increased 34 percent over the 1999 third quarter. The current Wall Street consensus forecast for fourth-quarter net income is $521 million, compared with $377 million a year earlier, which amounts to 38 percent growth, Fredrickson said.

“Wall Street is expecting this and our story has not changed,” said Fredrickson, speaking from the company’s headquarters in Hopkinton, Mass. He made the comments to Reuters after speaking with Ruettgers by phone in Buenos Aires. “EMC traditionally provides guidance on revenue growth but we do not publicly forecast earnings growth, and would not do so unless there was a material change in the profitability outlook,” Fredrickson said. “There is not,” he said. Ruettgers told Reuters in an interview in Buenos Aires early Wednesday that the company was still “very comfortable” with its 2001 revenue projections – which are nearly double 1999 levels. “We’ve talked about doing $12 billion in revenue next year and we’re still very comfortable with that,” he said. Ruettgers, in Buenos Aires for the EMC-sponsored World Cup of Golf this weekend, said he saw the greatest potential for business growth on the communications side of EMC’s business. Target customers include telecommunications companies that offer voice and data storage to businesses and consumers. “Eventually, our belief is that several years out a lot of people will have a great deal of personal information. It won’t be stored here, it won’t be stored in a PC, but it will be stored in an information utility of some kind,” he said. EMC’s business has been boosted as firms plugging into the Internet seek storage for data ranging from e-mail to medical images.

SURFCONTROL BUOYANT ON STRONG DEMAND

London, ENGLAND — Shares in British software company Surfcontrol Plc rose over 10 percent after the company reported strong demand for its products in the first quarter had been maintained during the second quarter. “This is a clear indication of the strength of the Internet filtering market and our ability to deliver strong performance going forward,” said Surfcontrol, which makes Internet access control products. The company’s second quarter was previously due to have run until December 31, to accommodate a change in the financial year-end to June 30, but was cut short at November 30. The fourth quarter will now contain the extra month, Surfcontrol said in a statement. “We are very pleased with a performance that has enabled us to achieve in three months what the market was expecting from a four-month trading period,” chief executive Steve Purdham said.

At 0835 GMT Surfcontrol’s share price was 13.3 percent higher at 1,175 pence, having closed at 1,037-1/2 pence on Tuesday to value the company at 259 million pounds. The gains added to the recovery from the 11-month low at 700 pence recorded on November 30 after the price halved in 10 days as software stocks suffered in the wake of a profits warning from Anglo-French firm Sema Group Plc. Surfcontrol peaked at 3,950 pence in March amid the craze for ‘new economy’ stocks and was still as high as 2,500 pence in early September.

GE ACQUIRES GE ENTER SOFTWARE, LLC

GE Power Systems announced the acquisition of outstanding ownership control of GE Enter Software LLC, a developer of power plant design, optimization and performance software. With this acquisition, GE Power Systems obtains 100 percent ownership control of this Menlo Park, California software company. Previously, in July, 1999, GE Power Systems acquired a 51 percent interest of ENTER Software, Inc., which was then renamed GE Enter Software, LLC. Financial details of today’s acquisition were not disclosed. The acquisition of remaining interest and control of GE Enter Software, LLC represents GE Power Systems continued investment in high-tech software solutions that improve the operating efficiency and performance for their power generation customers. GE Enter Software will continue as a part of GE Energy Management Services, a GE Power Systems business group. The management team at GE Enter Software have agreed to continue working for the business.

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