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USinternetworking Agrees to $300 Million Acquisition by AT& T

By Chris Kirkham
Washington Post Staff Writer
Wednesday, September 13, 2006

USinternetworking Inc. of Annapolis, a software management company whose fortunes rose and fell with the Internet boom, was acquired yesterday by AT&T Corp.

As part of the $300 million deal, the company is to remain an independent subsidiary of AT&T, with its management team intact.

The deal gives USinternetworking, which already serves clients such as Sunoco Inc., Visa USA Inc. and Yankee Candle Co., more resources to sell and market Web-based software applications, said Andrew Stern, chairman and chief executive.

The acquisition comes as part of an effort to improve the way AT&T remotely monitors and manages software applications for clients.

USinternetworking, as an applications services provider, sets up and manages companies' software via the Internet. This gives companies the option to farm out technical staff work for software products by providers that include PeopleSoft Inc., Oracle Corp. and Microsoft Corp.

AT&T has 30 Internet data centers around the world where clients can store software, said Mike Antieri, the company's senior vice president of business and marketing. What was missing were employees with the expertise to monitor the software. AT&T looked at developing the technology on their own, he said, but realized acquiring USinternetworking would be easier.

"Clients not only want us to provide a highly reliable global infrastructure for their software, they wanted us to actually manage it," he said.

USinternetworking , a highflier during the technology bubble, filed for Chapter 11 bankruptcy protection in 2002 after many of its clients -- dot-com and e-commerce companies -- went out of business. It reemerged later in 2002 as a private company, with significant funding from a private-equity firm.

Demand for remotely managed software is growing because companies do not want to waste money on software that may not be right for them, Stern said.

"It is a much better way for them to get business value out of the technology they buy," Stern said of the companies, adding that USinternetworking needs to "make sure that what we do is in line with their business models of today, tomorrow and the year after. If it doesn't, they're going to stop paying us."

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