NetIQ acquires WebTrends for a $1B stock swap

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Arguing that traffic analysis should be part of any Web site’s plumbing—not a stand-alone tool—NetIQ Corp. last week announced a $1 billion stock-swap deal to purchase WebTrends Corp. The two will combine to create a single infrastructure management and intelligence software company.

In WebTrends, NetIQ gets one of the top names in Web traffic analysis. The Portland, Ore.-based company made its name by selling software that, for a few hundred dollars, aggregated user data from Web sites. Some 50,000 customers later, WebTrends had begun to push a much more sophisticated solution, one that used marketing analytics to segment audiences.

"Forty-five thousand of WebTrends’ customers still tend to be the little guys—the chief cook and bottle washer outfits that do all the network, system and Web server management themselves," said Bill Gassman, senior research analyst at Gartner Group Inc. "WebTrends has the challenge of converting them to buyers of [its] high-end product, and each of those prospects is also an opportunity for NetIQ to sell management solutions.”

Worthy suitor

In NetIQ, WebTrends gets a suitor with valuable relationships and access to the executive suite.

San Jose, Calif.-based NetIQ competes with Hewlett-Packard Co. and BMC Software Inc. with software that manages the servers, bandwidth and applications of corporate intranets and Internet sites. Notably, it recently licensed Microsoft Corp. as a reseller of its products. The NetIQ pact is the largest licensing deal in Microsoft’s history.

The strategic reseller agreement between Microsoft and NetIQ is in sharp contrast to WebTrends’ sales approach. Because of its low-budget roots, the company has relied primarily on in-house salespeople and has only recently begun to build an outside sales force.

Key attraction

NetIQ’s sales force is able to get meetings with corporate information technology buyers, and that was a key attraction, said Glen Boyd, WebTrends’ president-chief technology officer.

Not only does WebTrends immediately appear in front of NetIQ’s 2,300 corporate customers, but ongoing sales efforts will ensure greater exposure with new prospects, Boyd said.

"This is, in my opinion, a shot in the arm to help us take the upper tier and move into the enterprise,” he said.

Web analytics should be a powerful addition to NetIQ’s product suite, said Tom Kemp, senior VP-products for NetIQ. Today, NetIQ can report on the back-end issues that might affect a Web site’s performance, but it doesn’t have the software to correlate bandwidth bottlenecks and server slowdowns to failed transactions or user departures from the Web site.

"We’ve grown at the expense of our competitors, and the addition of Web analytics puts them at a further competitive disadvantage," Kemp said.

Independents emerge

With WebTrends off the block, Accrue Software Inc. and NetGenesis Corp. emerge as the top two independent Web analysis companies. Accrue is the less stable of the two. It’s in turmoil following last week’s exit of President-CEO Rick Kreysar and its announced plans to restate its earnings for the quarter ended Dec. 31.

There’s an "80% chance" both will be bought by NetIQ competitors, content management, customer relationship management or business intelligence vendors before the end of the year, Gassman said.

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