Pacific Rim companies will represent the bulk of the outside investment in Unix System Laboratories Inc once the sale of the initial tranche of shares is complete. Despite earlier denials, AT&T Co is still waiting for two investors, one believed to be a concern in Singapore, the other a Korean, to pay for their stakes – the transactions are currently delayed pending their governments’ approvals. One at least is expected to transfer its funds in the next two weeks, the other could take longer. Unix Labs last week went public with the identities of the other 11 new stockholders, including Taiwan’s Institute for Information Industry, a non-profit quasi-governmental agency. Other investors from the Far East are Fujitsu Ltd, NEC Corp, Oki Electric Industry Co and Toshiba Corp. Europe is represented by ICL Plc and Ing C Olivetti & C SpA, with Novell Inc, Amdahl Corp, Motorola Inc and Sun Microsystems Inc from the US. With the exception of Novell, the 11 declared are all members of Unix International. AT&T Data Systems Group president Bob Kavner said the holdings of the 11 represent an even split between the European and American companies on the one hand and the Pacific Rim firms on the other, but that will change when the others come on board. The largest single investor, believed to be Novell, holds 4.6%, having paid $14.95m for its shares. Citing competitive concerns, AT&T declined to itemise the exact percentage each company now owns, and only ICL among the six investors turning up at the press conference in New York was forthright about its 1%, worth $3.25m. However at the Tokyo bash Unix Labs president Larry Dooling was more forthcoming and revealed that Fujitsu and NEC have each taken 3.6% while Toshiba and Taiwan each bought a 1% stake. A further 10% of the stock is earmarked for Unix Labs employees. The outside investors will get three seats on the nine-strong Unix Labs board of directors and must decide between themselves who their representatives will be, though AT&T has stipulated one must be an independent person from outside their ranks. Apart from Unix Labs president Larry Dooling, AT&T will nominate the remaining five seats, of which one will again be an independent outsider. AT&T said that the new investors are buying into a going concern that achieved profitability in 1989, and should see revenues in the high $80m this year and close to $100m next year – double its showing in 1988. Kavner, however, said the company is not yet ready to go public, if it had been, they would not be going through this private placing. A public offering is anticipated in two or three years, after Unix Labs finds its legs and gains some maturity. Revenues at that point should be between $150m and $160m. All the investors, whose stated motives span getting paid for contributing technology, to gaining a strategic advantage, to giving Unix a vote of confidence and evangelising it, to believing Unix’s fate should be in multiple hands, believe they will make money in the long run given the business’ growth rate of 20% to 30% a year.
Tapped Open Software Foundation
Kavner indicated AT&T approached the Open Software Foundation companies with the prospectus, but in vain, since they did not believe in the product. Other companies too were approached but did not have the money to invest. Perhaps navely, Kavner dismissed as press talk any notion that the Fujitsu group, composed of Fujitsu, ICL and Amdahl, and worth $20,000m a year in information systems alone, could exert a greater influence than any other by voting in tandem. He also dismissed the idea that the Japanese, having purchased a legitimate entry to the Labs, would now suck out its expertise for their own use. Ray Noorda, president of Novell, said he was interested in supporting Unix at the source level, given that NetWare and Unix would be merged. Taiwan’s III – or Triple I – whose job it is to foster and promote the island’s major industries, said that as Taiwan is the sixth largest systems provider in the world, its investment was clearly to its economic and strategic a
dvantage, since open systems are now mainstream. Unix Labs says that all of its existing relationships with Unix International will remain in place, as will most of those it has with AT&T, such as access to the Bell Laboratories research operation – it will also be ramping up its sales and marketing operation over the coming months and expanding its internationalisation efforts. Unix Labs has around 500 employees on its books, most in the US, with 40 each in its European and Pacific operations.
