July 10, 2001 10:15 AM PDT
Autodesk to buy back spinoff
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Autodesk, widely known for its design software used by architects and engineers, initially held a 40 percent stake in Buzzsaw and intends to purchase the remaining 60 percent of the maker of homebuilding-industry software. Autodesk will also assume responsibility for Buzzsaw's bills, debt or other liabilities as part of the transaction.
San Rafael, Calif.-based Autodesk said it expects the transaction to close by late August.
Buzzsaw provides Web-based collaborative tools and applications that help building professionals track projects, research zoning laws, access information on materials and better communicate with team members on a specific project.
Autodesk spun off the venture at a time when the capital markets were hungry for Internet start-ups and as a growing crop of niche players targeting the construction industry were enjoying the business-to-business boom.
Like others in the industry, including BuildNet and Bidcom, Buzzsaw has been tripped up by the overall sour economy and the ongoing shakeout in the business-to-business marketplace. Bidcom has since merged with Citadon, another provider of online services targeting the engineering and building industry.
Most online marketplaces that aim to simplify the purchasing process for a specific industry have had a rough time getting off the ground.
Though Buzzsaw is competing in a challenging market, the sector is still poised for explosive growth. According to Forrester Research, online commerce for the $43.2 trillion global construction industry will reach $43 billion in 2004.
Autodesk said the Buzzsaw acquisition is part of its efforts to tap new markets and serve a different set of customers such as commercial contractors, building owners and facilities managers. Buzzsaw said more than 125,000 construction professionals use its online services to collaborate on some 35,000 projects.
Even after it spun off Buzzsaw in October 1999, Autodesk continued to work with the company to co-develop new products and services, and will keep doing so through the finalization of the deal.
Autodesk has invested about $22.5 million in Buzzsaw, which drummed up $5 million in revenue last year. This year, Autodesk expects Buzzsaw's revenue to come in at more than double that figure and projects the company will break even in 2002.
The Buzzsaw transaction is not expected to affect earnings per share and revenue targets for Autodesk's fiscal year 2002. For its second quarter, which ends July 31, Autodesk said it is raising its expected range to between 44 cents and 54 cents per share.
Analysts surveyed by First Call anticipated the company to earn 46 cents for the quarter.