GIS Monitor May 3, 2001
- Leica Acquires ERDAS, LH Systems
- A Look at the GIS Side of Intergraph’s Q1 Results
- Vicinity Slashes 25% of Work Force
- MapShop Highlighted at Newspaper Convention
Departments: Points of Interest, Week in Review, Back Issues, Advertise,
This issue sponsored by:
LEICA ACQUIRES ERDAS, LH SYSTEMS
Swiss Leica GeoSystems announced Friday April 27, 2001 that it had
purchased ERDAS, Inc (image analysis software) and obtained the remaining
50% of shares in LH Systems (aerial photography) from joint owner, BAE
Systems. Leica will pay about US$30 million plus stock for ERDAS and about
US$15 million for the remainder of LH Systems.
Leica has been growing its GIS and Mapping Division since last year's IPO,
which yielded enough cash to purchase US-based Cyra Technologies Inc. (3D
scanning company focusing on engineering clients), US-based Laser
Alignment, Inc. (high-precision 3D guidance and automated machine control
systems producer) and increase holdings in AED Graphics AG (Germany-based
In a conference call for investors on Monday April 30, Hans Hess, Leica’s
CEO explained that he wants a strong foothold in the "emerging" GIS/RS
marketplace. He quoted statistics estimating the current market at US$2
billion, with an expected 20% increase in the coming years to top out at
about US$5 billion in 2005. This total includes hardware, software and
services. Leica eventually hopes to hold 10% of the entire marketplace.
Leica reasons that each of the new acquisitions now owns 45% of its
respective market, giving Leica an immediate and significant market share.
Leica described its competitors this way: Z/I Imaging, a company 60% owned
by Intergraph, and LH Systems together own 80-90% of the photogrammetry
market. ERDAS' main competitor is Canada-based PCI with about 20% of the
market, followed by Earth Resource Mapping with about 15%.
Leica has given ERDAS' and LH Systems' management teams incentives to stay
on and has committed to giving the two companies reasonable freedom to
develop their brands. At the same time, Leica will try to integrate all of
their GIS/RS offerings.
Leica is taking on no debt in the acquisitions. ERDAS had US$23.5 million
in sales last year with about US$3 million in profit. LH Systems had $US35
million in sales with about US$5 million in profit. The ERDAS acquisition
is anticipated to close in May with LH Systems to follow in June of 2001.
The acquisitions will definitely give Leica a large part of the GIS/RS
market. Leica will have a strong imagery data capture side (LH Systems),
analysis (ERDAS) as well as GIS and surveying hardware and software. With
the ERDAS acquisition, Leica draws itself even closer to ESRI, a long time
ERDAS partner. This relationship alone will help open up new markets. The
challenge for Leica will be to integrate the offerings carefully. Leica's
largest clients, government mapping agencies, utilities, telcos and
environmental firms can surely use all of these products and services -
and the company hopes that is exactly what they will choose to do.
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A LOOK AT THE GIS SIDE OF INTERGRAPH’S Q1 RESULTS
Intergraph has always been a tough company to track since the company
supports products and services outside of the GIS market. But now
Intergraph has set up each division as a business segment and reports
earnings by segment. Also, in the conference call, CEO Jim Taylor spoke
about each segment individually. Here are some of the highlights with
respect to GIS.
IPS (Intergraph Public Service) includes software and services aimed at
utilities, telecommunications, and public safety. The division was about
$2 million under planned revenue for the quarter. The segment did achieve
just over $1 million in operating income. Taylor suggested that IPS would
not be impacted directly by the general economic slowdown. He did say that
telecommunications would be impacted by dotcom demises and lower priced
bandwidth. Still, he feels that Intergraph customers tend to be large
players who should weather the storm.
IMGS (Mapping and GIS, including GIS products and services) had a “great
Q1” with over $3 million in operating income on $24 million in revenues.
Taylor did describe IMGS as the most challenging business in 2001. The
segment is still restructuring in the US and overseas as a vertical
business and will host their first User Conference in June. The highlight
of the quarter in terms of contracts was a pair of LARIS contracts (Land
information systems for Russia) which involve both software and services.
Two issues will lower Q2 expectations – late payments from the US
government from Q4 2001 and early delivery of software for LARIS.
There were many other topics covered that provide further insight into
Intergraph’s overall direction.
Hardware maintenance is now under Intergraph Government Solutions (IGS),
and will continue to support other non-Intergraph hardware, too. The group
is looking to do more outsourced work, especially for government clients.
The lawsuit continues with Intel. Intergraph is hesitant to say how much
income this may produce, but is optimistic.
Intergraph has closed on its sale of several products to Bentley.
Intergraph currently owns 33% of that company. Taylor suggests that he
expects -- and encourages -- Bentley to try an IPO to increase shareholder
value. Taylor explained that the three engineering/imaging products sold
were not part of Intergraph’s core business. Bentley had competitive
products, but with the purchase, now owns all of that space. Taylor went
on to say that without competition, Bentley should bring in more profits.
This, Taylor thinks/hopes, might encourage Bentley to move forward with an
Intergraph was questioned on the competitive situation in GIS/Mapping. In
response, Taylor says the company is focusing on high end mapping
(production, government mapping agencies); and on the lower end
(municipal, commercial), they are more services-oriented (client/server
enterprise work). Taylor suggests that Intergraph is a more a
service-oriented company rather than a product oriented company like ESRI.
On Smallworld, he claims, “they’ve become invisible” and notes Intergraph
has “seen less of it” which he explains in part as being due to the
changes under new owner, GE. In recent bids, he notes, Intergraph has come
out strong against Smallworld.
All VPs are on incentives tied to profitability.
The conference call is available on the Web until the end of May.
VICINITY SLASHES 25% OF WORKFORCE
Vicinity Corporation, best known for its MapBlast mapping and directions
site, laid of 40 employees this week – a reduction of 25%, citing a
reduction in ad revenue. MapBlast, in my mind, is second only to AOL’s
MapQuest in this space. Vicinity also private labels their data and
The layoffs, says the company, are more about setting their technology
focus than improving the bottom line.
Vicinity laid off 20% of its workers back in February.
The challenge for Vicinity, as well as for the other players in online
mapping, is transitioning from merely providing Web maps to the new world
of location-based services and wireless distribution of that data. The
tightening economy is likely to weed out some of the “old-style” players
in the coming months.
MapShop Highlighted at Newspaper Convention
In a rather low key announcement a few weeks ago, ESRI and the Associated
Press (AP) revealed a mapping solution for AP member papers. AP CEO Louis
D. Boccardi touted MapShop - among other new services – noting in
particular that these services will allow newspeople to do more with less.
MapShop, which allows the creation of maps from tabular data, is now in
use at 10 papers with 100 others testing the service. MapShop also works
with AP Census 2000, their census data service. The latest census data is
a hot topic for papers nationwide as they try to describe and explain
changing population and political patterns and deal with redistricting.
POINTS OF INTEREST
-Sysdeco, a Norweigen GIS company merged with XCON Data a longtime
partner, late last year. XCON was fundamentally a services company while
Sysdeco provided software and customization. The new company will provide
a single range of products and be called Sysdeco Mapmill. Their focus will
be business and Internet solutions.
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