CA, Cheyenne join software ops

Systems management vendor Computer Associates International Inc. added storage security and communications products to its portfolio with the acquisition earlier this month of software vendor Cheyenne Software Inc.

In a deal valued at $1.2 billion CA has offered to purchase all outstanding shares of Cheyenne's common stock for $30.50 per share. After the merg-er which has been approved unanimously by the boards of directors of both companies Cheyenne Roslyn Heights N.Y. will become a wholly owned subsidiary of CA Islandia N.Y. with all personnel joining the CA payroll.

Cheyenne entered the federal market just two years ago but already has a sizeable presence in the low-end to midrange environment with InocuLAN anti-virus software and ARCserve network backup software. The company which also offers hierarchical storage-management and fax products made its reputation supporting Novell Netware analysts said but also supports Microsoft Corp.'s Windows NT.

CA on the other hand is best known for CA-Unicenter an enterprise-level systems management product used widely in the Defense Department and other agencies. During the last two years the CA acquired a number of other companies to broaden its reach in the enterprise area including big-ticket purchases of Ingres and Legent Software.

The Cheyenne product line adds depth to CA's offerings said Mike Miller senior vice president at CA's federal office in Reston Va. "They have a product line that is extremely complementary with what we do " Miller said. "It adds something to the Unicenter implementations we have throughout the government."

The most obvious benefit comes from tying together systems and storage management functionality. The two companies recognized this several years ago and began a marketing alliance.

"We are seeing Unicenter just about everywhere we go " said Paul Miller manager of federal sales in Cheyenne's Alexandria Va. office. "This will give them the ability to take Cheyenne [storage management] and make it a key component of Unicenter " Miller said.

But the potential benefits go deeper than storage management according to CA.

For example CA can use Cheyenne's anti-virus software to scrub data as it comes across the network. Then once in the network CA can use its own security products which focus on access control to protect the data CA's Miller said. Cheyenne also offers desktop security products to complement CA's high-end focus.

Risks/Rewards

Yet such a merger always involves a certain amount of risk analysts said. In particular it may complicate the companies' other industry relationships said Sue Aldrich a senior consultant with the Patricia Seybold Group a Boston-based market research firm. Although the two companies can build much tighter links between their technologies "that very closeness reduces your relationships or interactions with others " Aldrich said. "As a result maybe both products lose a little bit."

On the other hand the merger could have a real payoff in the enterprise-management environment analysts said. There really does appear to be a synergy said Jay Borden vice president at the Giga Information Group a Cambridge Mass. consulting firm. "The more complete a solution can be the more complete the level of management and the easier it is to keep the enterprise in tune and up and running " Borden said.

Complementary Channels

In the immediate future CA will benefit from Cheyenne's federal contracts and sales channels the companies said.

Cheyenne is a subcontractor to Unisys Corp. on the Social Security Administration's Intelligent Workstation/Local-Area Network contract. The company's products are also part of large programs at the Bureau of Prisons the Immigration and Naturalization Service and the U.S. Postal Service.

Cheyenne also brings in a substantial indirect sales channel. About 90 percent of Cheyenne's revenue comes through resellers and 10 percent through direct sales - just about opposite of CA's ratio the companies said. CA plans to take advantage of these new channels while also beefing up Cheyenne's federal sales force CA's Miller said.