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Vendors throw $US115M into Stratus

Vendors throw $US115M into Stratus

Compaq Computer, Intel Capital and DB Capital Partners will make a combined investment of $US115 million in Stratus Technologies, a maker of fault-tolerant computing systems.

The investment will be in the form of a preferred stock purchase. The shares will be acquired from Investcorp, a global investment company that is the majority shareholder in Stratus. Stratus and Investcorp will retain majority control of the company, said Stephen Kiely, president and CEO of Stratus.

Also Wednesday, the company announced technology collaboration agreements with Compaq and Intel. Under the agreements, Compaq will licence and use Stratus' fault-tolerant technology in upcoming server products. Meanwhile, Intel and Stratus will work close together to use Intel technology for fault-tolerant computing, Kiely said.

The partnerships should help Stratus significantly expand its market reach and visibility, Kiely said.

"We are Wednesday a $320 million company in an industry dominated by companies 100 times our size," Kiely said. "We concluded that our maximum impact and value delivery to our customers will occur when we become part of the product stream of a major industry player."

Apart from Compaq and Intel, Stratus already has an existing licensing relationship with NEC Technologies of Japan.

Though such licensing deals will form a core part of Stratus' sales strategy going forward, the company will also continue to make and sell servers under its own brand name, Kiely said.

Stratus Technologies is an umbrella company based in Luxembourg that owns a US branch of Stratus Computer, and a separate intellectual property licensing division of Stratus. All these businesses were originally a part of Stratus Computer Inc., which was acquired by Ascend Communications - now a part of Lucent Technologies - in 1998.

Soon after the acquisition, Stratus' fault-tolerant computer business was cut loose to operate as a privately financed, independent company with the same name. Fault-tolerant software is designed to prevent the loss of data during failures and to manage tasks such as forced switchovers from a failed system. The goal is to detect hardware problems that are about to shut down a system and quickly redistribute the workload to other systems.

Stratus has more than 700 high-end customers worldwide and is focused primarily on selling fault-tolerant systems to the financial services, retail, travel, health-care and gaming markets.


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