Software and services company raises $61 million with a round of equity financing.
It's not often anymore that a company raises $61 million in capital, but that's exactly what Divine Inc. has done with a round of equity financing led by Oak Investment Partners.
Execs at the software and services company say they don't want customers doubting Divine's future, so they've made it a priority to build a hefty cash reserve. "In this marketplace, even IBM and Cisco are being questioned about their viability," says Divine CEO Andrew "Flip" Filipowski. The financing, along with cuts that have slashed $85 million in annual costs this year, will make the firm profitable by year's end, he says.
The company was in danger of being delisted from the Nasdaq earlier this year, prompting a 1-for-25 reverse stock split two weeks ago. Growth through acquisition has been Filipowski's modus operandi--Divine has bought more than 30 companies in the past 18 months. In doing so, it gouged its reserves--down from $140 million in December to $80 million in March, says Robert Lerner, an analyst with Current Analysis. Rather than continue the shopping spree, Divine needs to focus on integrating its acquisitions. Says Lerner, "Right now, they're just a jumble of pieces."
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