Neither the pouring in of capital or the growth of localization’s largest players seems to have been slowed by the decline in most technology markets around the world. Of the firms that were formed in the last few years, all seem to have not only brought in new CEOs to run the business, but also, CFOs to watch after the money that is left. The firms that are left are no longer offering either tools or services, but rather services and technology. It is becoming increasingly harder to determine which companies are or are not globalization firms.

On the assumption that there is still a lot of growth and an increasing number of firms offering globalization services to watch, IDC started a new “continuous” information service covering eGlobalization and Localization Services. They announced this new “service opportunity” in a printed document, which became obsolete the moment it appeared. For, two of the firms it said it would track, Language Ware and Wholetree, went out of business; Sykes was merged into SDL; and eLingo isn’t accepting new business (“eLingo is undergoing business changes that might affect service to our new customers”). When I clicked on WorldBlaze, the link was dead. After three more tries, I did get something—eLingo’s web site.

The localization business is still moving fast; all information about it needs daily revision. New outside investment activity was down, but, there is still quite a bit of money activity going on.

Publicly Traded Companies

Lionbridge Technologies (LIOX) continues to grow; recently announcing the US $15 million acquisition of Data Dimensions (DDI). This adds another US $25–$30 million in revenue to Lionbridge and yet another phrase to add to my financial glossary, as this acquisition was “accretive after the elimination of redundancies and the leveraging of infrastructures.” The rationale was to add to Lionbridge’s testing in new verticals (wireless and web) which compliments its VeriTest division’s activities. We know that the localization business is growing, but the testing business is one where companies outsource 85% of their application testing. Lionbridge is also moving heavily into e-learning, having announced a new venture with iGlobal to go after the US $23 billion market.

The first quarter saw an earnings per share growth of 102%; two of Lionbridge’s analysts recommend LIOX as a strong buy, one a moderate buy, and a fourth hold. The stock has been trading at around US $4.00 a share. In looking over Lionbridge’s strategy, it is concerned with scalability and connectivity which it feels the latest acquisitions and new ventures add to. In addition, Rory Cowan, Lionbridge’s CEO stated that his and other globalization firms have entered into the third phase of their maturation. Phase one was a focus on reduced per word cost, phase two was re-using previously translated content and phase three is transaction cost reduction.

SDL (LS: SDL) has also expanded by completing the £6.2 million acquisition of real time translation engine TranscendRT from Transparent Language. For those of you not into jargon, “real time translation” used to be called machine translation. The Growth Company Investor said this “ SDLGlobalization solutions developer rounded off an impressive 12 months as full year results exceeded market expectation. Teather and Lockwood (one of SDL’s analysts) recently recommended the group as a strong buy, forecasting profits of £0.98m; while Collins Stewart forecast losses of £2.0m. The final figure of £1.06m profit was turned in from turnover up 129% to £29.73m.” On March 17th its shares closed at 283 pence.

Bowne (BNE) has, also, been broadening its globalization offerings through Bowne Global Solutions and with its Immersant Internet consulting division as well. During the year 2000, Bowne recorded sales of US $69 million from globalization and US $16 million from Immersant. In addition, globalization in the last quarter was profitable, as the acquisition costs for localization were fully amortized. Bowne’s stock has been trading at around US $10.

Berlitz (BTXZ) is still trying to take itself public. There is speculation, that since its stock is trading around US $13 a share and its book value is US $35, it might make an acquisition to enhance BerlitzGlobalNET’s activities, which now encompass eBusiness, Globalization, BelitzIT Technologies and Berlitz GlobalNET University.

The best word to describe Alpnet (AILP) today is retrenching. It did report sales of US $50.4 million during the year 2000; but, also a loss of US $11 million. As a consequence, its stock has been trading at less than US $1. It has restructured its corporate and sales management as well as closed a number of facilities in an attempt to turn itself around.

Lernout & Hauspie (LHSP) continue to be an on going drama. Management was changed once again, when the Board of Directors fired John Duerden, who had been brought in to clean up the financial mess that L&H found itself in. Then The Wall Street Journal reported that three officers and a director sold US $13 million in stock immediately after L&H was subject to a SEC investigation. However, the company did receive a US $60 million bank loan and it recently sold off a speech recognition unit for US $13 million. Its Mendez unit has advertised for the first time in many years. This unit remains the object of speculation as to whether it will also be sold off to satisfy the various claims against L&H, which remains in bankruptcy on two continents. To quote Reuters “L&H, which got protection from creditors in the United States and similar protection in Belgium, is looking to sell its Mendez translation business to pay off US $60 million in interim financing”. The stock is no longer listed, but it is traded over the counter at around US $2 a share.

Systran (Sicovam Ticker.7729 on the French “Nouveau Marché; Reuters SYTN>LN and Bloomberg SYSTNM) reported sales in 2000 to be 60.7 million French Francs; 32.5% came form software publishing, 24.7% from e-services, 15.5% from development. The total was 72.7 % from new activities. Its stock is trading at around 6 Euros or 39 French Francs a share. The company’s capitalization stands at around 52 million Euros as we go to print.

Two other globalization firms are available over the counter. Logisoft ( LGST) which recorded US $ 6 million in sales in 2000, but a net loss of US $2.5 million. Its stock is trading at around us 35 cents a share. I Sage, traded as THEO, is trading at around us 75 cents.

Private Companies

We did not discern any new venture capital activity among the private globalization companies. Trados, however, was named as one of Washington dc’s fastest growing companies at a recent ceremony. With 706% revenue growth since 1996, Trados was the only multilingual technology company to make the list. On the other side of the Atlantic, Vistatec won the second finalist position in the Ulster/Irish Independent Growth in Business Awards. This is similar in nature to the Washington dc awards, as Deloitte and Touche are sponsors of both. Vistaec, founded in 1997, succeeded in getting profits in its first year, generating sales of £2 million and a profit of £130,000. According to Vistaec, this rose to sales of £3.5 million with £350,000 profit in the second year; while the third year yielded sales of £6million and profits of £750,000. In 2001, the company expects sales of £11 million and a profit of £ 1 million. Mervyn Dyke commented “Although there are dot com ‘crash and burn’ scenarios and continuous lay offs dominating the media headlines… our revenues have grown by 78% each year for the last three years.”

No other private companies gave any indication of sales growth although, we can note that the effort underway to spread globalization is unprecedented, in terms of the resources being devoted by Global Sight, We Localize, Uniscape and others.

John Freivalds
JFA Inc.
5160 Colonial Drive
Minneapolis, MN 55416
USA
Tel: +1 763 525 0731
Fax: +1 763 525 0659
Email: JFA@worldnet.att.net