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6/13/2003
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Mercury Buys Kintana: Start Of A Spending Spree?

Mercury Interactive Corp.'s acquisition of IT-governance software vendor Kintana Inc. last week could be just the beginning for the company, which happens to be one of the few with healthy revenue growth and profits in the IT sector.

The purchase--for $125 million cash and $100 million stock--comes a month after Mercury bought J2EE diagnostic tools developer Performant Inc. for $22.5 million cash. Mercury, a busi- ness-technology optimization software vendor, still has $1.3 billion in cash and isn't finished, says chief marketing officer Christopher Lochhead. "We're looking to grow our business through internal products and strategic partnerships," Lochhead says. "We're not looking at this as a cost-reduction move but as continuing to invest in people and products. It's about accelerating and expanding our position."

Mercury's software helps businesses implement and manage software to get the best business value. With Kintana, Mercury broadens its portfolio with software that lets companies manage IT projects and the processes and workforces associated with them.

Companies are grappling with too many disappointing IT investments, which has changed the definition of innovation, says Gartner analyst Theresa Lanowitz. "The new innovation is implementation: 'How do we get everything we've purchased to work together?'" And that, Lanowitz says, is what Mercury does well.

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