July 11, 2005
PTC Acquires Arbortext For Associative Enterprise Publishing
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Jeff Rowe - Managing Editor

by Jeff Rowe - Contributing Editor
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PTC announced that it has entered into a definitive agreement to acquire Arbortext, Inc., a recognized leader in the emerging Dynamic Enterprise Publishing market, for $190 million in cash. Arbortext serves 1,700 customers worldwide in multiple industries, including discrete manufacturing, life sciences, financial services, insurance, publishing, and government. With this acquisition, PTC will be uniquely positioned to enable customers to create, manage and dynamically publish critical information concurrently with the development of related products or services, improving time-to-market, quality, cost and customer satisfaction.

The transaction is expected to close by the end of July 2005, subject to customary conditions including regulatory approval. The transaction has been approved by Arbortext shareholders. PTC expects the acquisition will be accretive to earnings in fiscal 2006.

"For 20 years, PTC has helped more than 35,000 companies develop superior products and improve productivity in product development," said C. Richard Harrison, president and CEO of PTC. "By bringing our passion for customer success and our technology leadership to the process of dynamic enterprise publishing, we believe we will be able to accelerate our growth. The complementary PTC and Arbortext solutions will enable companies to better capture and deliver critical content that is the basis for a wide variety of upstream and downstream enterprise deliverables.

"This acquisition is a natural extension of PTC's product development system vision. Together with Arbortext, we will enable discrete manufacturing customers to manage product content and related documentation from concept through retirement," Harrison continued. "Additionally, this acquisition expands our footprint into new verticals such as pharmaceuticals, financial services, government and traditional publishing by providing these customers with a complete solution for highly personalized product or service offerings."

Based in Ann Arbor, Michigan, Arbortext has 250 employees in offices around the world and generated approximately $40 million of revenue during the past 12 months. Arbortext's technologically advanced solutions are revolutionizing the way companies deliver critical business information to multiple audiences through its "dynamic enterprise publishing" approach. By creating and utilizing a single source of XML-based reusable content, Arbortext's solutions enable the automatic delivery of highly configured interactive content that is accurate, relevant, and precisely tailored to the needs of multiple audiences in a variety of formats. International market research firm IDC ranks Arbortext as a
leader in the emerging Dynamic Enterprise Publishing software market, and predicts this market will grow more than 25% annually to over $1 billion in 2009.

Companies of all sizes in all industries create products and services that require vast quantities of documentation such as engineering specifications, user manuals, training materials, promotional materials, product labels, policies and procedures, contracts, service manuals, product catalogs and regulatory submissions. These documents must also meet the specific requirements of multiple audiences, such as customers, employees, partners, investors and regulators. Publishing critical product and service information through an ever-increasing array of media (electronic, print and Web) is one of the most challenging processes companies have yet to optimize.

"Documentation is based on content that evolves constantly, and as such, the process of publishing has traditionally taken place only after products or services are well defined," said Ray Schiavone, president and CEO of Arbortext. "This has resulted in a manual hand-off of information between various departments where each must laboriously reshape the information to suit their own needs. In addition, the tools traditionally used by companies to publish documents are not flexible or powerful enough to solve the complexity of this process. They require a substantial manual effort, and produce generic information that attempts to meet the needs of all audiences while satisfying none.
Arbortext's technology approach is completely different from that of traditional tools, and significantly reduces waste and duplication inherent in the publishing process today."

"The powerful combination of PTC and Arbortext will enable the delivery of the industry's first turnkey solution for creating and managing a single source of product and service information, and then configuring and publishing that information dynamically for a variety of downstream uses," said Jim Heppelmann, executive vice president and chief product officer of PTC. "Arbortext's technology fits well with PTC's product development system, enabling full information associativity throughout the product lifecycle. This will allow product changes to be automatically updated in all formats, ensuring that all enterprise users, suppliers and customers use the most accurate and up-to-date
information. The combined solutions will provide customers with a new breed of innovative information delivery vehicles that create highly dynamic and personalized user experiences. At the same time, PTC will leverage the openness and flexibility inherent in our solutions to work with a variety of information sources, content management solutions and other enterprise applications."

PTC and Arbortext believe that their mutual customers, such as Solar Turbines Incorporated, should benefit significantly from an integrated solution. "Solar Turbines Incorporated is very supportive of a strategy to integrate Arbortext with our design and data control solutions," said Martin Habel, manager of Technical Documentation, Solar Turbines Incorporated. "We see a strong value in aligning these processes."

This is a somewhat surprising, but not totally unexpected acquisition by PTC, since it seems to dovetail with some other recent announcements surrounding other acquisitions and overall corporate direction.

That said, you still might ask, why did PTC acquire Arbortext? Like just about all companies, regardless of size or market segment, PTC is constantly evaluating opportunities to grow revenue and earnings by strengthening or expanding what it offers with complementary products and services. In this case, I would suspect that PTC expects that Arbortext's technology and expertise will help PTC grow into new markets, while expanding what they can offer existing customers. PTC says its customers have asked for publishing capabilities like Arbortext's, integrated with PTC's product development system. The fact that Arbortext's forte is the increasingly ubiquitous XML doesn't hurt matters,

This particular acquisition will help PTC extend itself into the area of enterprise publishing, providing the ability to publish product- or service-related information in a way they could not before without employing third-party products. Whether for documentation purposes or regulatory compliance, Arbortext will provide PTC with capabilities for accelerating product development while reducing the associated cost of publishing in multiple languages and formats. In addition, the acquisition of Arbortext will help PTC expand into new vertical markets such as pharmaceuticals, financial services, publishing, and government. What, not entertainment or gaming, as well? Thankfully, no. Anyway,
Arbortext will introduce PTC into new markets and PTC will provide new sales and support channels for Arbortext, so it works both ways.

Just check out the list of current Arbortext customers - Abbott Laboratories, American Express Financial Services, Audi, Boeing, Bombardier, British Aerospace, Caterpillar, DaimlerChrysler, Ericsson, Ford, General Electric, GlaxoSmithKline, GM, IBM, Thomson Publishing, Lucent, Nokia, Nortel Networks, Oracle, Pfizer, Ricoh, Sun Microsystems, Toyota, United Airlines, Volkswagen, Volvo and the US Department of Defense including the Navy, Air Force, Army, and Marine Corps.

Since, the PTC and Arbortext product lines are complementary, there is virtually no capability overlap. With this acquisition, PTC can deliver Arbortext's products in conjunction with its product development system to PTC's existing customers. For example, manufacturing companies will now be able to develop assembly instructions, maintenance manuals, test plans, and owner's manuals, concurrently with product development. These documents will be associative with the product model, so product changes are immediately reflected in associated documents.

Publishing, especially 3D, has become a really big deal in the past few years, as evidenced by the number of companies that have gotten into it, so this acquisition seems like a good fit for both parties involved. I tend to think that we'll see some interesting things come out of this acquisition relatively soon with the new version of Windchill that was recently released, and the new version of Pro/ENGINEER Wildfire that will be released sometime in the next several months.

The Week's Top 5

At MCADCafé we track many things, including the stories that have attracted the most interest from our subscribers. Below are the five news items that were the most viewed during last week.

Deep Impact, the spacecraft pair designed and built by Ball Aerospace & Technologies Corp., accomplished its goal of colliding with deep-space comet Tempel 1 and excavating material from the nucleus of the comet. Together, the Flyby spacecraft and the Impactor spacecraft feature some of the most sophisticated technology ever developed for deep space flight, including three advanced instruments for imaging the comet. Deep Impact employs the Medium Resolution Imager (MRI); a High Resolution Imager (HRI); and an Impactor Targeting Sensor (ITS). The HRI is the primary science instrument for the mission, composed of a telescope with a
30- centimeter (11.8 inch) aperture, an infrared (IR) spectrometer, and a multi- spectral CCD camera. Other Ball-built technologies involved in viewing the collision with the comet include NASA's Submillimeter Wave Astronomy Satellite (SWAS). It is observing Tempel 1 to monitor changes in water production from the comet before and after the impact.

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-- Jeff Rowe, MCADCafe.com Contributing Editor.

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