• October 3, 2002
  • By David Myron, Editorial Director, CRM and Speech Technology magazines and SmartCustomerService.com

Pivotal to Acquire MarketFirst; Warns of Losses

Pivotal Corp. announced its intention to acquire MarketFirst Software Inc. today to win more customers looking for a marketing automation solution. In addition to selling the MarketFirst solution to Pivotal's existing 1,500 customers, executives at Pivotal expect the acquisition to better position the company to close customer deals it had previously lost. "If a customer's primary focus is marketing automation, we now feel we are second-to-none and now can win those deals where in the past we lost," says Bo Manning, president and CEO of Pivotal. Manning admits that more customer deals were lost than won in the past where the initial focus was marketing automation. If Pivotal wanted to build its own marketing automation solution, he says it would have taken Pivotal "two years, at best, to get where MarketFirst is." The deal, a stock transaction, will cost Pivotal 725,000 shares of its existing 25.4 million outstanding shares, representing nearly 3 percent of the company. For that, Pivotal will take control of MarketFirst's existing client-base, totaling fewer than 100 customers, including Sharp Electronics, Documentum, and Pharmacia. Pivotal had been eyeing approximately eight marketing automation companies, Manning says. "We looked at the whole field. What stood out with MarketFirst are its extraordinarily happy customers and its complete suite of marketing applications, which includes campaign management, lead management, event management, and analytics management. Additionally, the ease of integration with our technology is important to us," he says. "The name of the game in CRM is not to eat the whole elephant all at once. Get a fast and measurable return with small parts," Manning says. "MarketFirst customers are deploying their solutions within the first month, sending out highly targeted personal campaigns, and tracking their results and benefits. We've talked to a lot of their customers. They have a universally satisfied customer base." A Sharp Electronics spokesperson, who is currently using MarketFirst's marketing automation tool, concurs: "Unlike solutions from [large CRM vendors], we were able to deploy the MarketFirst solution in a few days." How will the acquisition affect existing MarketFirst customers? According to Manning, there will not be a drop in support. "All of MarketFirst's research and development and tech support is moving to Pivotal, and we will continue to support its customers. We will also provide a pathway to Pivotal functionality if that is relevant to them," Manning says. The MarketFirst products are expected to be branded as Pivotal products in the long-term, Manning says. Common with many mergers and acquisitions there will be layoffs; however, the specifics will not be announced until Pivotal's quarterly earnings announcement, slated for October 24th. Regarding its quarterly earnings, however, Pivotal today announced its preliminary financial results for the quarter ended September 30, 2002. Pivotal expects revenues for the quarter will be in the range of $12 million to $13 million, down from the $16 million to $19 million it was expected to receive. "It was a challenging quarter all around for the CRM industry. It was a slow summer. A number of projects were delayed that were scheduled to start in July and August and were started in September," Manning says. Manning expects the acquisition of MarketFirst to be a "key part of getting Pivotal back to profitability." And the company is still in acquisition mode. "There are a couple of areas we are looking into, but nothing we can talk about yet. If we find the right technology at the right price, we will strike and strike fast," Manning says.
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