- The Washington Times - Tuesday, May 6, 2003

   Micros Systems Inc., which provides technology solutions to the hospitality industry, said yesterday it bought Datavantage, a supplier of similar products to the retail sector, for $52 million in cash and stock.
   The Columbia company said the deal closed May 1 and will add between 10 and 18 cents to per-share earnings in 2004 and at least 25 to 27 cents in 2005.
   Shares of Micros rose 12 cents yesterday to close at $26.49 on Nasdaq. Shares have climbed $4.51, or 20 percent, in the last six months.
   Micros Chairman and CEO Tom Giannopoulos said in a conference call that the purchase of Cleveland-based Datavantage will help the company expand into the retail industry. Currently, Micros Systems serves restaurants, hotels, motels, casinos, stadiums and theme parks. Datavantage’s current customers include Bed Bath & Beyond, Ikea, Staples, Timberland and Abercrombie & Fitch, and nearly 200 others.
   The companies’ products are similar, in that they both help businesses operate effectively using software that manages things like reservations and orders.
   Mr. Giannopoulos said Micros hopes to incorporate Datavantage’s systems into retail aspects of its existing hospitality business. He also said the purchase will lead to greater expansion of Datavantage’s products overseas. Currently, Micros has a heavy international presence, but Datavantage’s services are used mostly in North America.
   “There is a lot of potential business in Europe, the Far East and South America,” Mr. Giannopoulos said. “The opportunities are tremendous.”
   Analysts agreed.
   “The real upside will come from leveraging Micros’ existing international infrastructure with the product base Datavantage brings to the table,” said Daniel Moore, an analyst with CJS Securities in White Plains, N.Y. “Micros has the relationships and infrastructure.”
   Micros said Datavantage will operate as a wholly owned subsidiary, and that very little restructuring will be required.
   “They’ve done a very good job and will basically run themselves,” Mr. Giannopolous said. “This is not a company that needs fixing.”
   Company officials and analysts said they expect the Datavantage acquisition to contribute to Micros’ solid growth in revenue and profit over the last year.
   The company announced record earnings of $5.4 million (31 cents per share) for the quarter ending March 31, up from $3.7 million (21 cents) during the comparable quarter last year. Revenues also hit a record high: the company pulled in $97.6 million in the first three months of 2003, an increase of $5.2 million from a year ago.
   Analysts credit Micros’ management team for not overpromising and underdelivering revenue projections. But one key to Micros’ success, analysts said, is a hefty amount of revenue from maintenance work, which is steady and continuing.
   “They have a very heavy percentage of recurring revenue,” Mr. Moore said. “That tends to hold up pretty well.”
   Datavantage got about $4 million of its $42 million in revenue in 2002 from recurring maintenance business.
   Datavantage employs about 300 people in Cleveland and about 60 in Boston. It had been owned by Saratoga Partners, a private equity investment firm.

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