Description
Founded in 2000, Waveset creates so-called identity management products that helps companies control access to computer networks by managing passwords and user profiles for employees, customers and business partners. It posted $8 million in revenue in 2002, according to Hoover's Inc. estimates.
Analysts said the deal is a good fit.
"Sun in recent years has taken a back seat in identity management, and Waveset immediately brings them into contention as a player," said Mike Neuen- schwander, a senior analyst at Burton Group, a research firm in Midvale, Utah. "Sun gets really strong technology, and Waveset gets the resources of a large corporation."
Sun, based in Santa Clara, Calif., is one the biggest names in computer hardware. It's the No. 3 maker of servers that power Web sites, handle e-mail and run corporate computer networks. The company claims it sells more than 80 percent of the servers connected to the Internet. It also sells its own software to run the networks.
Waveset employees, all of whom had stock options, also are winners in the all-cash deal.
"We wanted to reward them for their three years of hard work," Turner said. "Some of the early folks are looking at a seven-figure outcome. We think that's a pretty cool reward."
The deal also should pay off for Waveset's investors, including Austin Ventures, Lightspeed Venture Partners and Silverton Partners. Waveset raised $30 million, and it still has about $15 million, Turner said.
Waveset will become part of Sun's software group, with its products folded into Sun's own identity management software, Java System Network Identity Services. Waveset's 100 employees will remain in Austin, and Turner will become vice president of Sun's identity management group, officials said.
"In Waveset we saw a proven management team that knows how to run a business; we saw a very solid Fortune 500 customer base; and we saw products that will become an integral part of Sun's software organization," said Jonathan Schwartz, Sun's executive vice president for software.
Turner said the deal will enable Waveset to grow in a market that is rapidly consolidating. At least a dozen companies are selling competing software. Last year, Tivoli Systems Inc., the Austin-based subsidiary of IBM Corp., acquired Waveset rival Access360. IBM would not say how much it paid for Access360, although estimates ranged as high as $200 million.
Waveset had a bright future as an independent company, its founders said. But Sun's deep pockets and customer base were a powerful attraction.
"This market has gotten so heated up that we felt the faster way than to grow organically was to partner with someone like Sun," he said. "It accelerates our business by a year to two years."
"Waveset has 100 people; Sun has a global sales force of 7,000 people," said co-founder and President Mark McClain.
The company's four founders -- Turner, McClain, Kevin Cunningham and Bill Kennedy -- have seen how the strategy of a small software company teaming with a technology giant can pay off. Before founding Waveset, all were executives at Tivoli Systems, which was sold to IBM in 1996.
"We saw firsthand the advantages of taking the resources of a large company and using them to grow," McClain said.
Waveset is the second major deal involving Sun and an Austin-related company this week.
On Monday, Sun chief executive Scott McNealy announced his company would develop a line of servers using Advanced Micro Devices' new Opteron chip. Sun already has about 350 workers in Austin who design software and advanced processors.
Products & Services
secure identity management solutions,
identity management software
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