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January 17, 2000

Manufacturer Invests In E-Business Expertise
Textron's $100m investment in safeguard scientifics buys access to technology, consultants

By Chris Murphy

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extron Inc., an $11.5 billion industrial company, said last week that as part of its E-business strategy it will invest $100 million in Safeguard Scientifics Inc., a holding company for Internet startups.

Textron, which manufactures Cessna aircraft, Bell helicopters, and a variety of automotive and industrial components, also plans to set up management teams from its business units that will hire E-business consultants from two Safeguard-funded companies, Cambridge Technology Partners Inc. and aligne Inc. The groups will collaborate with IT providers to develop technologies for Textron.

Kenneth Bohlen, CIO at Textron, in Providence, R.I., says he expects the alliance with Safeguard to help his company develop online collaborative selling, procurement, and human-resources management and advanced custom applications.

Peter Musser, Safeguard's CEO and chairman, says the alliance will put Textron in touch with companies that come to Safeguard with cutting-edge technologies that could be adapted to Textron's needs. Safeguard owns stakes in 40 Internet-related companies and has invested in another 210 through venture-capital funds.

Industrial companies such as Textron are becoming more-frequent investors in E-business suppliers, in hopes that the closer ties lead to technologies that provide them with a competitive edge. "This gives you access to technology and perhaps the chance to have something customized rather than just buy it piecemeal," Goldman Sachs analyst Jack Kelly says. "They're getting more attention with an investment like this than if they were just a customer."

Other manufacturing companies already investing in Internet businesses include United Technologies Corp. of Hartford, Conn., and General Motors Corp. United Technologies agreed in December to pay $30 million for 30% of Next Generation Networks, a Minneapolis company that's building Internet-ready computers to be used by passengers riding in United Technologies' Otis elevators.

GM has alliances with Internet-access provider NetZero Inc. and online auction company Commerce One Inc. that let it buy equity stakes at a set price if the partnering companies hit revenue targets.

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