Darby Overseas Investments, the PE arm of Franklin Templeton Investments,said that its Darby Technology Ventures Fund sold Atvi to Euronet Worldwide. Ativi is a Brazilian prepaid payments processor. Financial terms were not announced.

PRESS RELEASE

Darby Overseas Investments, Ltd. (”Darby”), the private equity arm of Franklin Templeton Investments, announced that its Darby Technology Ventures Fund (”DTV”) sold Ativi, a Brazilian prepaid payments processor, to Euronet Worldwide (NASDAQ: EEFT), a leading payments processor headquartered in Leawood, Kansas. Ativi, based in Sao Paulo, distributes electronic prepaid products through a network of over 14,000 retail locations throughout Brazil.

Darby led a buy-out of Ativi in 2005, together with Intel Capital and Santiago-based MiFactory, with the objective of establishing the company as the leading electronic distributor of prepaid products in Brazil under new senior management. The company successfully refocused on its core business of electronic distribution of prepaid cellular airtime. Since Darby’s investment, Ativi’s sales grew by 6500%, its retail distribution network grew 1200%, and it has been consistently profitable since 2006. Ativi recorded net revenues of approximately $44 million over the past 12 months.

Jonathan Whittle, head of Darby’s Latin American technology investments, and Chairman of the Board of Directors of Ativi, said: “The Company prospered as a result of the strong growth in Brazil’s cellular market and from the transition from physical distribution of prepaid airtime to electronic distribution. The management team did a great job establishing Ativi as a clear market leader, with the highest retailer productivity and profitability in the industry. Ativi is an ideal platform for Euronet’s entry into the Brazilian market, and we look forward to seeing the company continue to prosper under new ownership.”

Darby Technology Ventures is a venture capital fund focused on Latin American early stage technology companies. DTV has backed a number of successful companies in Brazil, Colombia, Mexico and Central America, helping them to establish strong market leadership in key Latin American countries and develop significant operations internationally. Other DTV investments in Brazil include a leading provider of digital identity solutions and a prominent global provider of mobile enterprise software solutions.

Darby Overseas Investments, Ltd. was founded in 1994 by The Honorable Nicholas F. Brady, who served as U.S. Secretary of the Treasury between 1988 and 1993. Richard Frank joined the firm as CEO in 1997 after his career at the IFC/ World Bank. In 2003, Darby became a fully owned subsidiary of Franklin Resources, Inc. (NYSE: BEN), a global investment management organization operating as Franklin Templeton Investments. For more information please visit darbyoverseas.com.

Franklin Templeton Investments provides global and domestic investment management solutions managed by its Franklin, Templeton, Mutual Series, Fiduciary Trust, Darby and Bissett investment teams. The San Mateo, CA-based company has more than 60 years of investment experience and over US$602 billion under management as of July 31, 2010. For more information, please visit franklintempleton.com.

Source: http://www.pehub.com

HOUSTON, Sep 01, 2010 (BUSINESS WIRE) — EquaTerra, a global business advisory firm, today announced it has appointed Rick Bertheaud to lead its Finance and Accounting (F&A) Advisory practice, and Sarah Pfaff to lead its Procurement and Supply Chain Advisory group.

Bertheaud has more than 25 years of expertise in process redesign, organization restructuring and change leadership in outsourced, shared services and internally transformed environments. He has redefined and implemented finance and other staff function delivery models for clients including Nestle, Bristol-Myers Squibb, Mead Johnson Nutrition, Pearson and Darden Restaurants. According to Bertheaud, “In response to the economic downturn, most organizations in 2009 looked to short-term mandates to retrench finance and other back-office functions. In 2010, we’ve seen many of these same organizations taking a more programmatic approach to transformation to lock in lower costs for the longer term, as evidenced by a resurgence of interest in shared services and outsourcing initiatives. Today’s clients are seeking quicker paybacks, shorter deal terms and less investment in technology and other transformation — in essence, they are looking to quickly reduce and variablize costs as they position themselves for an unknown economic future.”

Pfaff has spent the past two decades helping organizations realign their cost structure, governance and management processes, establish shared services centers, evaluate and transition services to outsourcing arrangements, reengineer business processes and reduce overall cost structure and spend. Before joining EquaTerra she founded eBreviate, an eSourcing firm, and was executive vice president of consulting services and chief marketing officer at FreeMarkets. Said Pfaff, “As a result of the recession, which slashed procurement budgets and teams, today’s chief procurement officers are increasingly leveraging both internal transformation and outsourcing to achieve greater procurement savings. And while there had previously been a focus on just the transactional procurement processes, companies today are expanding their view across the full procurement lifecycle, from strategic sourcing to payment.”

EquaTerra’s F&A Advisory practice helps organizations select the right service delivery strategy, per their unique requirements, to reduce the cost of F&A processes, improve overall business performance, support growth and maintain compliance. Its advisors support clients in all phases of the lifecycle, from F&A strategy and assessment to implementation to operational governance. The firm’s Procurement and Supply Chain Advisory practice helps clients gain an in-depth understanding of their current procurement operations, and then determine the right strategy, implementation approach and operational governance model to boost cash flow and drive improvement across category management, cataloging, ordering and the rest of the procurement cycle.

About EquaTerra

EquaTerra sourcing advisors help clients achieve sustainable value in their IT and business processes. Our advisors average more than 20 years of industry experience and have supported more than 2,000 transformation and outsourcing projects across more than 60 countries. Supporting clients throughout the Americas, Europe, Middle East, Africa and Asia Pacific, we have deep functional knowledge in Finance and Accounting, HR, IT, Procurement, Real Estate & Facilities Management and other critical business processes. EquaTerra helps clients achieve significant cost savings and process improvement with internal transformation, shared services and outsourcing solutions. For more information, please contact Lee Ann Moore at +1 713.669.9292; www.equaterra.com.

Source: http://www.marketwatch.com

AT&T (NYSE: T) has put its sale of its domestic Japanese outsourcing services operations to Internet Initiative Japan Inc. (IIJI) (Nasdaq: IIJI) to bed.

The deal, which was originally announced in June, calls for AT&T to transfer about 1,600 domestic Japanese business customers and about 245 customer support employees to IIJI.

Regardless of the sale, AT&T plans to maintain a strong presence in Japan. The service provider already maintains its own domestic Japanese AT&T Global Network infrastructure, which includes four global network service nodes, remote access infrastructure for corporate clients, an Internet Data Centre and significant international subsea cable capacity. Over this infrastructure, AT&T will continue to offer multinational corporations (MNCs) its portfolio of wireline managed connectivity such as Ethernet, mobile, cloud and unified communications applications.

“Japan is an important market for AT&T, and we are focused on providing a world-class level of service to our multinational customers with a presence there,” said Bernard Yee, vice president AT&T Asia Pacific in a release

While AT&T is selling off its Japan outsourcing operations to IIJ, AT&T will continue sell IIJI products to the MNCs it serves that have Japanese operations. In turn, IIJ will buy global connectivity services from AT&T to support its Japan-based customers’.

Selling off IIJ is just one of two major divestitures AT&T has recently completed in an effort to focus its attention on its core telecom business. In addition to IIJ, AT&T reached a deal to sell its Sterling Commerce business to IBM (NYSE: IBM) in May.

Source: http://www.fiercetelecom.com

When Dell launched its first smartphone in the U.S. on August 24, early product reviews were dismal. Compared with the slew of other nifty new smartphones available today, critics groused that the only thing remarkable about the phone — called the Aero — was its $99 price tag. They have deemed its hardware mediocre, its operating system — running on a 16-month-old version of Google’s Android — outdated, and the requisite smartphone bells and whistles disappointingly meager.

If Dell wanted to find a bright side to the phone’s debut, it was that it went largely unnoticed, for two reasons. First, in an increasingly crowded smartphone market, one more new entrant hardly causes a ripple anymore. Second, the launch was overshadowed by a bigger, more dramatic event that has been unfolding for weeks at the $53 billion, Texas-based company — the bidding war against rival Hewlett-Packard for a small, little known developer of high-end data storage technology called 3PAR. After having initially offered to buy 3PAR for a little more than $1 billion in what looked like a sure-fire deal in mid-August, Dell found itself in a face-off with Hewlett-Packard (HP), whose second counter-offer reached $30 a share, or $2 billion. (The one-upmanship seemed likely to end in HP’s favor when Knowledge@Wharton was about to publish this article on September 1). All this to own a company with just under $200 million in 2009 revenues.

Both the lackluster smartphone launch and the 3PAR tug-of-war make one thing clear — nothing about Dell’s attempts to reinvent itself from a PC and server maker to an all-encompassing IT products and services company has been easy, says Daniel A. Levinthal, a Wharton professor of management. “[Dell] seems to have lost sight of what it’s good at and how to find new opportunities to leverage that.” This is in sharp contrast to the Dell of yesteryear, he says, which confidently won “customers who valued its tightly run business model,” designed to churn out economically priced computers with a snap of the finger. “Dell hasn’t become any less wonderful at doing that,” he notes. “But guess what? The world has changed.”

The problem, according to Levinthal and other Wharton experts, is that Dell woke up too late to this changed world, even as competitors like HP snatched away its once enviable market lead by offering sharper products and services. With founder and chairman Michael Dell back in the CEO post since 2007 after a three-year break, the company has been at pains to claim a bigger stake in higher-margin corporate-focused businesses — like the storage services that 3PAR offers — and fast-growing consumer markets such as smartphones. But do Dell’s ambitions add up?

Not yet, observers say. Despite the early achievements of its groundbreaking, low-cost business model, “Dell has leadership issues, it has competitive advantage issues and it has strategy issues,” suggests Saikat Chaudhuri, a Wharton management professor. “Dell sees the need for diversification, but does it see the need for transformation? There is a big difference.”

Forgetting the Customer

In their new book, Strategy from the Outside In: Profiting from Customer Value,George S. Day, a Wharton marketing professor, and Christine Moorman of Duke University’s Fuqua School of Business write that Dell’s plight is typical of a company that becomes so good at what it does — in this case, manufacturing and delivering low-cost PCs — that it misses cues from its market that the company needs to change. Dell has succumbed to what the authors call “inside-out hubris.”

“To formulate an effective competitive strategy, we argue that you’ve got to stand from outside the firm and look at it through the respective lenses of competitors, customers, channel members and so forth,” says Day, who is also co-director of Wharton’s Mack Center for Technological Innovation. “That worked really well for Dell. It was a company that prospered through the 1980s and a good part of the 1990s with a really clear-cut customer value proposition. It was able to master logistics and deliver standardized hardware at prices and speeds no one else could match.”

However, like other successful companies, “Dell began to think, ‘We know this market better than anyone else,’” Day notes. “So the focus shifted from the ‘outside in’ [approach of] looking at its position in the market to thinking, ‘How can we maximize earnings out of our existing resources and capabilities’” at the expense of, rather than in addition to, thinking about what its customers need.

Still, that low-cost model — and what Day refers to as Dell’s “monolithic focus on efficiency” — has served it well, according to experts. “Around 1997, when Dell was the strongest, it was holding about one week of inventory. All the competitors were holding two or three months,” says Serguei Netessine, professor of technology and operations management at Insead in France and co-director of the Insead-Wharton Alliance. “That created a huge difference in the cost structure — computers lose value very quickly. Each week that a computer sits on a store shelf, it loses about 1% of its value. So Dell was winning.” According to Netessine’s estimates, Dell’s costs were around 8% less compared with competitors at the time, like IBM or Gateway — a difference that helped the firm become number one in the global PC market.

And today? Having been usurped by HP as the top PC vendor, Dell is fighting to stay in second place. “Dell still has an efficient supply chain. It is constantly improving and taking out inefficiencies,” says Netessine. Yet the 8% cost advantage has dwindled to around 2% as other companies have learned how to improve their own supply strategies. “It’s hard to have any kind of meaningful advantage with 2% because Dell’s products are not dramatically better or different, or more reliable, and the company doesn’t offer any better service,” he adds. “That’s not sufficient to sustain the dramatic growth that Dell had in, say, 2000.”

Not that its growth today isn’t enviable, especially considering the beating that many computer firms — including Dell — took during the recession. For the second quarter of the current fiscal year, which ended July 30, Dell reported a profit of $545 million on revenues of $15.5 billion, compared with a profit of $472 million on revenues of $12.8 billion a year ago. Meanwhile, cash and equivalents at the end of July were $13.1 billion. During the results announcement, Brian Gladden, Dell’s chief financial officer, attributed much of the growth to “overdue client refresh” — that is, large corporate customers increasing IT spending after the belt-tightening of 2008 and 2009. Sales for its servers, storage and networking products were up 43% to $4.3 billion. Services revenues increased 57% to $1.9 billion.

As for computers, Dell managed to hold on to its lead over Acer, but just barely, with 10.6 million PCs shipped (up 19.1%), behind HP’s 14.8 million units and slightly ahead of Acer’s 10.2 million. Server shipments, too, grew in the second quarter: According to Gartner estimates, Dell was in second place, with nearly 550,000 servers shipped (up 35%), compared with HP’s number one slot at 644,00 units and IBM’s number three slot at 270,000.

However, no company in the fast-changing hardware and software sectors can take its market share for granted. The challenge was made especially clear in the recent jostling in the notebook computer market. All the big incumbent vendors have been ceding market share to aggressive rivals over recent months — and then came Apple’s iPad in the spring. According to Deutsche Bank analyst Chris Whitmore, the new iPad helped Apple double its share of the global notebook computer market, leapfrogging Dell and other second-tier vendors like ASUS, Lenovo and Toshiba, and moving it to third place, behind HP and Acer.

Being eclipsed by Apple and the new iPad goes to the heart of Dell’s struggle. Dell is no Apple, says Netessine. “Dell has never invented a notable product. What it has done is deliver a basic product that someone else has invented but get it to consumers much more efficiently. To be an Apple requires a little bit more. [Apple] is structured around innovation. It has been innovating its whole life.”

Into the Clouds

That explains why Dell wants to focus less on hardware and more on services — or what Netessine calls “servicization.” Converting products “that are commoditized into services — which are … harder [for consumers] to shop around for and compare with one another — is popular among manufacturers nowadays,” he notes.

Dell is betting on the growing interest among its corporate customers in cloud computing services — Internet-based computing that lets companies access resources, such as software and storage, which providers like Dell host remotely on their behalf. Dell’s $1.4 billion acquisition in 2008 of EqualLogic (which posted $800 million in sales for the first six months of fiscal 2011) and a partnership with storage giant EMC have already enabled it to begin providing cloud-computing services for small- and mid-sized companies.

For some companies, Netessine suggests that servicization can be a big shift. “You have to really change your focus from short-term selling of a product to thinking about five, 10, 15 years down the road and possibly bundling some kind of service agreement with customers buying those products,” he states. “Thinking carefully about the life cycle of those products — what kind of contract do corporate customers want; can you support customers with extended service agreements; can you offer some kind of multi-tiered services — requires very different expertise, but I don’t think it is as far removed from Dell’s core strengths as, for example, selling smartphones.”

Several recent acquisitions move Dell further in the servicization direction. That includes its biggest-ever acquisition, the $3.9 billion deal last year to buy (at a 68% premium) IT management and solutions provider Perot Systems, which is currently being integrated into the Dell Services unit.

“I’m wondering whether all this is too little too late,” says Chaudhuri. “What I’m missing are some bold moves.” Compare Dell’s acquisitions with HP’s, he adds. In 2008, HP expanded its services offerings by buying a frontrunner — Electronic Data Systems — for more than $13 billion. Shortly after, software company Oracle bought Sun Microsystems for $7.4 billion to get into the computer hardware market for the first time. What these companies want to do, according to Chaudhuri, is emulate IBM, which sold its computer manufacturing to Lenovo and shifted into services by buying PricewaterhouseCoopers Consulting in 2002 for $3.5 billion.

David Hsu, a Wharton management professor, agrees that Dell has the cash and the clout to push its strategy further than it has been, despite concerns about tougher times ahead if the U.S. tumbles back into a double-dip recession. “There’s a tendency to focus on profitability and operations, and not make a strategic move, but I don’t think the shareholders would like it, even in an environment like ours,” he says.

Smaller acquisitions for a company like Dell shouldn’t be overlooked, however, observes Lawrence G. Hrebiniak, a Wharton professor of management. “It doesn’t matter whether an acquisition is big or small. The question is whether Dell finds something to acquire that fits logically or extends its strategy. Is Dell buying growth but destroying value?”

As Hrebiniak sees it, while the 3PAR acquisition makes sense as a way for both Dell and HP to expand their services, the premium both were willing to pay does not. He adds that the bidding war has been more about HP-Dell politics than 3PAR. “There’s a little ego involved,” he suggests. “HP got rid of [CEO Mark Hurd in August] and it wants to prove to the world that it can still make strategic decisions without him…. And Dell still wants to beat HP badly because HP has beaten them in PCs.”

The 3PAR win, if successful, would be good timing for Michael Dell. In July, he agreed to pay $4 million, and the company agreed to pay $100 million, to settle a case in which the Securities and Exchange Commission (SEC) accused Dell executives of misleading investors about its profitability. A month later, at the company’s annual general meeting, one-fourth of Dell’s shareholders refused to vote for Michael Dell’s reelection to the board as chairman. That’s why “he wants to show that he’s still okay — even though a quarter of his shareholders don’t think so — that he can do a lot of good things for shareholders and they’re wrong for picking on him,” notes Hrebiniak.

All Things to All People

According to Day, Dell needs to sharpen its focus. He describes the current strategy as “a day late and a dollar short…. HP and others have been expanding into services far longer than Dell has.” He suggests that part of Dell’s challenge is shaking its obsession with internal efficiencies to focus outwards. For companies such as Dell, “you have to go out and live with your customers and channel members, and focus not only on what your competitors are doing in your markets but also on what they’re doing elsewhere.”

Other experts raise concerns about Dell’s inability to articulate its priorities. Is it smartphones and the like for consumers? Is it one-stop shop products and services for its corporate customers? Is it PCs and laptops for everyone? Or a little bit of everything? “I’m not sure if Dell is hedging its bets or if it is uncertain of where it wants to go, or if it wants to be an all-round big player, like an HP that straddles both worlds,” says Chaudhuri. “At present, it looks like it’s not sure where it can make much impact.”

Dell is “trying to be an ‘everything’ IT business, a diversified company,” adds Netessine. “The problem is that it’s extremely hard to do all of those things well. It’s hard to see how Dell can … compete with all those powerful companies that have been in the business longer and have much better products in many cases.”

It is a problem when companies like Dell “try to take an option on many, many different segments,” says Hsu. “It can be very expensive as well as confusing [to send] mixed signals not only within its own organization, but also to the outside world as to what is unique about Dell.” What Dell needs to remember, he adds, is that “you don’t have to master the whole value chain in order to be a valuable company.”

Source: http://knowledge.wharton.upenn.edu