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7/29/1999
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Lotus Acquires Online Training Technology

Cambridge, Mass.11:57 AM EST Thurs., July 29, 1999

In an effort to bolster its online-learning market depth, Lotus Development Corp. today acquired technology from Macromedia Inc., a developer of distributed learning products.

Under the terms of the deal, Lotus will purchase Macromedia's Pathware learning-management system. The agreement allows Lotus to exclusively develop, market and distribute Pathware. The technology eventually will integrate into Lotus' LearningSpace product line, company executives said.

"This is a significant increase in our investment in this overall space," said Brian Bell, senior vice president of the knowledge management division at Cambridge-based Lotus.

Last May, Lotus acquired Databeam Corp. and Ubique Ltd., two strategic acquisitions in the distributed-learning space that added new synchronous collaboration features to its LearningSpace tools.

"What we're adding [with Macromedia] is self-pace capabilities, which is critically important to our customers," Bell said. "We think that that combination of self-paced, synchronous collaborative, and asynchronous collaborative is exactly what this industry needs and competitively unique, as it turns out."

Lakewood Publications, which focuses on the training market, estimates that U.S. companies budgeted $60 billion for training in 1998. Of that, approximately one-third was delivered by computer, over the Web, via satellite and other means.

Approximately 40 sales, marketing and development employees from Macromedia will join Lotus, as part of the knowledge management division. Lotus also plans to open a knowledge management facility nearby.

Macromedia, based in San Francisco, posted income of $7.2 million or 15 cents per share for its fiscal quarter ended June 30, 1999, up 240 percent from earnings of $3 million or 7 cents in the same quarter a year ago. Revenue from Macromedia's first quarter totaled $49 million, an increase of 51 percent from revenue of $32 million last year.

Macromedia's earnings beat Wall Street expectations by a penny. Its stock closed at $37.63 Wednesday, but was down 69 cents Thursday in active trading.

"Macromedia is very much a dominant player in the authoring side of this marketplace," said Ian Richmond, president of the interactive learning division at Macromedia. "As we go forward, we will continue to invest in the authoring solutions side of the distributed-learning business."

Richmond added that this marketplace offers a significant opportunity for Lotus channel partners to develop custom content and deploy integration services.

Industry analyst Bruce Richardson of Advanced Manufacturing Research Inc., a market-research firm in Boston that tracks the ERP industry, concurred that knowledge management and distributed learning opens new service offerings for VARs and systems integrators that implement complex software products and platforms.

"Because of the complexity of ERP software and the number people it impacts, there is a lot you can do without flying someone out for training or trying to explain it over the phone," Richardson said. "People always under-budget training, and the longer the training, the greater the diminishing returns."

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