Mastech name change pays off
Wednesday, March 08, 2000
By Ken Zapinski, Associate Editor/Business
The market price for a good e-business idea: a cool $1 billion.
Mastech Corp. saw its market value jump that much because the
Oakdale-based technology company unveiled a new name -- iGate Capital
Corp. -- and a new business plan.
As Mastech, the company provided computer software, consulting and
staffing help to businesses around the world.
As iGate, it will transform the old Mastech business lines and some new ideas
into a portfolio of separate companies. Each will focus on helping
corporations with very specific aspects of their electronic commerce
strategies.
IRG Inc., for instance, will help companies sift through their huge databases
for valuable nuggets of useful information. Symphoni, based in New York, will
provide Web marketing expertise. iGate begins life with nine such companies,
but Chief Executive Officer Sunil Wadhwani said he wants to double that
number by the end of the year through acquisitions and internal growth.
"This is only the beginning," said Wadhwani, who helped found Mastech in his
Mt. Lebanon home in 1986. "We are a very different company from today
on."
Indeed. The business at Mastech's heart -- providing temporary computer
workers to companies to deal with specific projects -- was not even
mentioned in the company's official iGate announcement. The staffing business
accounted for about 35 percent of Mastech's $470 million in revenue last
year, but it may not have a place in iGate. Executives are assessing the future
of the Mastech Applications Services division, which could include a sale to
an outside company.
iGate employs about 5,500 people worldwide, with close to 600 in the
Pittsburgh region, including 300 at its Oakdale headquarters. The company,
which changed its stock symbol to IGTE, closed at 643/16 yesterday, up
211/4.
"The key now is execution," Wadhwani said.
Internet technology is developing so rapidly that corporations need lots of
help to use it to their best advantage, Wadhwani said.
The smaller focused companies in the iGate portfolio will be able to act and
react more quickly and flexibly than Mastech ever could, he said.
iGate intends to take its companies public as they grow, with the first two --
Emplifi Consulting and Mascot Systems -- expected to have their initial public
offerings of stock within the next few months.
Wadhwani said iGate shareholders will have a chance to purchase shares at
IPO prices.
The new structure will also give Wadhwani the chance to retain and attract
executives by offering bundles of pre-IPO stock options that could be worth
tens of millions of dollars if the companies are successful. Mastech, which
went public in 1996, could never match that.
In addition, iGate intends to operate two investment funds. The first is a $75
million fund that includes a $50 million Mastech-financed venture fund
announced last year, with an additional $25 million from iGate.
The second, to be kicked off in the third quarter, will start with $100 million
from iGate with an additional $200 million to $300 million from strategic
partners, according to iGate spokesman Will Graves.
Through the first nine months of last year, Mastech reported net income of
$30.2 million, or 60 cents per share, on revenue of $362 million.
The company has not yet reported its year-end figures.
The nine companies in the iGate portfolio and the company's definition of their
businesses are:
Emplifi Consulting (enterprise Web integration), Mascot Systems
(Web-focused offshore services), Enterprise Network Solutions (network
consulting), eJiva (customer-care solutions/Internet trading solutions),
Symphoni (Web marketing solutions), IRG (business intelligence/information
data management), iGate Europe (Web integration services for the European
market), iProcess (a joint venture with General Electric Co. for outsourcing
Web-based business processes to offshore locations), and Extranet
(e-vendor management).
post-gazette.com
[emphasis mine] |
