From Detroit Free Press
SOUTHFIELD, MI — Compuware Corp. paid $7 million to acquire Covisint LLC, the failed online automotive entity in which its owners invested more than $500 million, according to federal documents Compuware filed Wednesday.
Compuware also disclosed that it has cut its workforce to fewer than 8,700 employees.
In February the largest high-tech company based in Michigan announced it would buy Covisint in a move to gain a stronger foothold in the automotive industry.
Peter Karmanos Jr., Compuware’s chairman and CEO, would not disclose the purchase price at the time.
But the company’s anuual report filed with the Securities and Exchange Commission showed it paid $7 million in cash plus certain lease obligations up to $2.1 million.
Covisint, owned by General Motors Corp., Ford Motor Co., DaimlerChrysler AG, Renault and Nissan, was formed in October 2000 as a way for the automotive companies to hook into the exploding dot-com economy.
Analysts said the companies invested a combined $500 million.
The auto companies positioned Covisint as the one source all businesses from automakers to suppliers would use to conduct business electronically. Suppliers rejected the online exchange. They claimed the company was nothing more than a tool to drive down prices.
The company failed to turn a profit and keep a CEO.
Under Compuware’s banner, Covisint has won two significant contracts, one with Johnson Controls Inc. that was announced Wednesday and another with GM.
Compuware expects Covisint to generate $25 million in revenue this fiscal year and then grow to $100 million.
In other Compuware news:
The company employed 8,660 people worldwide as of March 31, 2003, compared to 13,220 as of March 31, 2001. That number is expected to grow to 8,760 as Compuware adds 100 workers to its Montreal division. Since the start of its restructuring efforts in the fourth quarter of 2002, Compuware has cut 1,600 workers worldwide.
External legal fees cost the company $45 million during its 2004 fiscal year, up from $34.6 million in 2003 and $12.5 million in 2002.
The major expense has been its ongoing battle with IBM over allegations about stolen software code. The case is set to go to trial later this year.
During August 2003, Compuware repurchased approximately 200,000 shares of common stock at an average price of $4.97 per share. About $124 million remains for future purchases.
Copyright 2004 Detroit Free Press. All Rights Reserved.
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