In looking over what e-translate did, the new CEO decided that service is a commodity business and that greater margins could be made as a software company. New management with software experience was brought in, but this change does not guarantee they will be able to find a niche or enough revenue to keep going alone. But it does show that investment and business practices run the old fashioned way are now back in fashion.

A couple of VC-driven vestiges do remain, though. Translations.com continues to operate with funding from Deutsche Bank and Parnell Venture Partners and indeed acquired Language for Industry. But don't confuse Translations.com with the company that uses translate.com as the domain name, and which belongs to the RWS Group. Both have reported getting e-translate's emails in the past. So, having the name Convey Software should guarantee that the company will now be able to get its own mail delivered. Oh yes, there is also 800 translate.com which has language experts in no less than '5,693' languages as well.

While government spending is "old hat", as Americans say, when it comes to the European Union, this is no longer true for the US Government. It turns out that the Department of Defense has awarded US$ 18.5 million for language services (translation and interpretation) to All World Language Services. So someone other than Systran is getting federal language money. This comes on top of an earlier award of some US$ 13 million. The Department of Defense decided that it was too risky to be fighting a war in the Middle East with no real language resources. For his skill in winning government contracts, the president of All World Language Services was recognized as Small Business Entrepreneur of the Year. The Washington Post reported he was also recognized in a lawsuit for withholding commissions from a sales person who won the contracts. He lost the suit and was forced to pay US$ 800,000 in past due commissions.

A movement is afoot by both small and large localization vendors and publishers in the industry to do something to promote the concept of localization by getting companies to realize it is in their interest to go global. This is essential, since unless the market grows, everyone involved will seek to gain more business by even greater pressure on prices, The proposed 'Got Localization' campaign is modeled on the "Got milk" effort to promote milk in offices. I have just finished a book on the diamond business, which has yet another approach. Apart from the cartel aspects of the diamond trade, the industry did get together to promote the idea that diamonds are not only common and everyday but also something incredibly special that should be valued for their intrinsic worth ("diamonds are forever") In fact, diamonds are almost as common as sand, but we are made to believe they are scarce, and consequently willing to pay a higher price for them.

Occasional ad campaigns by multinational companies help out these scattered efforts. The latest and most notable is by HSBC, "the world's most local bank." In one of its adverts, it shows a USA Football, a UK football and an Australian football, with the byline "Never underestimate the importance of local language." HSBC, like the nascent localization industry 'Got localization' effort, is based on the assumption that awareness will create greater demand for its services and that greater demand in turn creates more business and profits.

But while US Federal Government funding was directed at primarily one firm - Systran - for its Russian MT work, there are greater competition and rewards in the commercial sector. And in the competitive localization wars of the past several years, four firms seem to have edged out in front: Bowne Global Solutions (BGS) part of Bowne (BNE), Lionbridge Technologies (Liox), SDL International (SDL) and Berlitz GlobalNet, part of Bennesse Corporation.

BGS represents only 6% of Bowne's total sales. The company reported sales of US$ 101 million in 2001 but lost US$ 24million compared with a gain of a million dollars the year before. This loss however includes the purchase of Mendez. Now BGS is positioned where it said it wanted to be all along - large enough in scale to serve its larger clients. The real challenge in a service business, though, is to provide the chemistry that keeps all the employees acquired in recent acquisitions fully productive. BGS management has become increasingly centered in Parsippany, New Jersey and, like Convey, has brought in a whole new level of non-language related personnel to manage the company. Bowne stock is trading at around US$ 13 a share.

Lionbridge Technologies (Liox) reported sales of US$ 25.3 million in its fourth quarter and a positive EBITDA of US$ 119,000. It share price stands at around US$ 2.50 as we go to print.

SDL International (SDL) reported 2001 sales of GB£ 33.7 million in 2001. It purchased Alpnet for US$ 7 million, plus the assumption of US$ 12 million in debt. Its share price has been around 65 Gbpence, and the company did not have a profitable fourth quarter in 2001.

Berlitz GlobalNet is firmly entrenched as a Tokyo-based business segment of Benessee, and reported revenues of US$ 104 million in fiscal 2001. For those interested in a more detailed view of Benessee, you can look up the company in your browser. The company's results for language instruction and translation are lumped together, but they have been remarkably stable (in yen terms) over the last three years.

Systran is the only other major firm in the language industries with a public stock (Sivocamm Paris). In 2001, it reported sales of € 8.2 million, down from € 9.3 million the year before, and losses of € 1.2 million euros in that same period. Its stock has been trading around € 2.

So in translation and localization sales of publicly traded companies worldwide, we come close to a figure of US$ 500 million in sales, with companies hardly profitable. Cisco is among a large number of companies requesting proposals to handle it language work, so there is some work in the pipeline.

Will this sector continue to attract suitors? Well, A&T has announced a new series of speech and language technology products (www.naturalvoices.att.com), which is reminiscent of how the late Lernout & Hauspie entered a wider language market some years ago.

We see no additional funding entering the scene among firms that have benefited from venture capital in the past couple years, but rather a back-to-basics approach to be understood by the market place and to make sales.

As Louis Gerstner, the outgoing chairman of IBM, stated "There never was a new economy."

John Freivalds (JFA@worldnet.att.net) is a long-time contributor to the LISA Newsletter and market analyst. His "Money Talks" column has regularly appeared in the LISA Newsletter for more than two years. He is currently with JFA International.