Pivotal plots road map under new parent, Chinadotcom

NEW YORK - Chinadotcom Corp. unit CDC Software completed Wednesday its acquisition of midmarket CRM vendor Pivotal Corp., resolving for Pivotal's customers months of uncertainty about their software supplier's future.

Pivotal CEO Bo Manning said his company is back in growth mode now that its financial pressures are eased. Pivotal had been hit hard by the slowdown in enterprise software buying: In its most recent fiscal year, ended June 30, it posted revenue down 19 percent, to $56.1 million, and a net loss of $27.6 million.

Hong Kong-based Chinadotcom paid $56.6 million for Pivotal, issuing to Pivotal stockholders Chinadotcom shares valued at $20.7 million and paying the rest of the purchase price in cash. Chinadotcom plans to use Pivotal's sales, marketing and customer service applications as components in the broader ERP software suite it is constructing through acquisitions.

Manning said he plans to remain with the company as head of Pivotal, which will operate as a CDC Software subsidiary and remain in its Vancouver headquarters. In the past month, as Pivotal started planning its integration with CDC Software, it began hiring to fill open development and sales positions, he said. The company hopes to fill nearly 100 research and technical support positions, half in Vancouver and half in India.

With the backing of its new parent, Pivotal has also doubled its marketing budget and restarted its acquisitions program, according to Manning.

"We're in fairly deep discussions with two companies, in CRM and related markets," he said.

Chinadotcom's focus is on the Asia-Pacific market, but the company has no plans to scale back Pivotal's presence in North America, Manning said.

"The CDC strategy is to build a large global enterprise software company and, concurrent with that, to take all the software that they're building and use their Asian distribution to go after those markets, to go after China," he said.

One Pivotal customer, who spoke on condition of anonymity, said he's pleased Chinadotcom won the last-minute tug-of-war for control of Pivotal.

"We're quite satisfied with the way that turned out. It's probably the best result we could expect," he said.

The customer, a midwestern U.S. industrial technology developer, chose Pivotal as its CRM vendor last year, shortly before Pivotal put itself on the block, and he worried that the company could be acquired by a rival that would discontinue product development. What he's heard from Pivotal and CDC Software, though, has been reassuring.

"It sounds like they'll be focusing on the core business and beefing up support," he said.

Pivotal plans two incremental product updates in 2004 and a major release in the first half of 2005, Manning said. Forthcoming developments include improved analytics and business process management capabilities, and increased integration with Microsoft Corp.'s desktop applications, he said.