CenterBeam
Report on Business Television – Canada AM, 6/10/03: Interview w/ Kevin Francis, CenterBeam CEO
ANCHOR: Amanda Lang
GUEST: Kevin Francis, CEO, CenterBeam
LANG: Along with a year-to-date increase of 20 percent for the Nasdaq, there has been a recent flurry of deal-making activity in the long-suffering tech sector. That has some investors excited again about the overall group. Here to discuss whether or not the rally is here to stay we're joined by Kevin Francis. He is CEO of CenterBeam in Silicon Valley.
Good morning.
FRANCIS: Good morning.
LANG: You are a company that sells products -- IT services, infrastructure -- to other companies. So you get a pretty good sense of the pulse of buying. How does it feel today versus, say, a year ago?
FRANCIS: I think it's improving. I think the momentum is getting stronger. I think the restructuring that has gone on in most of the companies right now that has been impacted by the last two years is I think positioning them well now to move forward. And I think we're starting to see that in terms of the market reaction.
And I think, generally speaking, I think we're coming to the positive side of this downturn that we have just lived through.
LANG: So, when you see a 20-percent gain for the Nasdaq, year-to-date, do you look at that and think that's exactly what it should be? Or do you get worried that we're overextending?
FRANCIS: I think right now that a lot of the analysts are having some caution about whether or not the valuations may be getting too high. My own sense right now, certainly from a Silicon Valley point of view, is that the restructuring that the firms have gone through in the last 12-18 months I think have got them very well-positioned to take advantage of the growth opportunities that are there. Certainly, the early indicators that we're seeing are very positive. So I am very much optimistic that we are to the positive side right now.
LANG: Now, let's talk about merger activity. There does seem to be an increase of that -- certainly rumoured activity. And then we've got some big deals out there -- the PeopleSoft/Oracle deal. Is this a sign of the end of the bottom?
FRANCIS: Well, I think it is. And I think part of the reason for the consolidation is usually an indication that it is the beginning of the major turn when that is happening. And I think that is positive for the market. I think it's positive for the industry as a whole. Obviously, I think over-consolidation becomes a negative.
But I think a lot of the activity that we've seen over the last number of weeks I think has created certainly a resurgence in energy. Recently I flew out on the weekend from Silicon Valley and certainly there is a buzz in the Valley area in the activity that's going on. So I think, overall, Amanda, it's very positive.
LANG: And one of the things that I guess you would gauge personally is whether the overhang from the big-spending late '90s is gone. People bought a lot of inventory that they had to work through. Are we past that point?
FRANCIS: I don't know that we're totally past it. I'd say right now that people are evaluating their business cases now with a tremendous amount of scrutiny. But business decisions in order to enable productivity for organizations is as true today as it was in the past. I think that the economics for chief financial officers and CEOs right now about whether or not they're positioning their companies for competitive advantage are driving a re-evaluation of the acquisition of technology. And I think we're back. I think it is now coming into a more attractive period, both for the consumer and the industry at large.
LANG: You partner with some of the biggest names in tech. Your clients are the names that we're all familiar with. How has doing business with them changed over the last little while?
FRANCIS: Well, if you are referring to the investment in our company with Microsoft and Intel and Dell and EDS, it is certainly a very important one for us. Their attention in us is because of the innovation we have in the service and delivery that we're bringing into the market. We are just now opening up an operation here in Canada as we extend ourselves to all of North America. I am on my way to Saint John in the next couple of days as part of our North American preparation, which we hope to be open sometime in the third quarter.
So I think it's positive. And I think it's another indication of he fact that this turnaround I think is real, not imagined, and that we can all begin to take advantage of it as we move forward.
LANG: What does CenterBeam do that's unique enough to bring in these disparate partners as investors?
FRANCIS: We have developed a way to manage the infrastructure of other companies remotely, with 50-percent higher productivity and anywheres between a 20- to 25-percent reduction in cost. That's usually a good combination when you can do both simultaneously. That has attracted the interest of Microsoft and Intel, Dell and EDS.
So, we are very unique in this area. We are one of the fastest-growing companies in North America in the space. And while we are private at the present time we are looking forward to the growth opportunities that we are executing on over the last 12 months certainly that has led us to the expansion plans here in Canada.
LANG: Maybe there will be another tech boom and you can take it public in the future.
FRANCIS: Well, we will see what happens.
LANG: All right. We appreciate you been here.
FRANCIS: Thank you, Amanda.
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