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SunGard to Spin Off Disaster Recovery Biz

SunGard to Spin Off Disaster Recovery Biz
October 4, 2004

SunGard (Quote, Chart) said its board of directors has unanimously decided to spin off its disaster recovery business and take it public through a tax-free distribution of shares.

SunGard, of Wayne, Penn., said the split will help the company streamline its focus, which will lead to better performance for each entity going forward.

The company's software and processing business earned $1.8 billion, or 60 percent of the entity's revenue, in 2003. SunGard Availability Services, which provides managed hosting, storage, information security, records management and disaster recovery, earned $1.2 billion in 2003.

Should the spin-off be approved, SunGard Availability Services will retain the SunGard name and brand, as well as the more than 2,000 workers and 3 million square feet of facilities in 60 locations.

Disaster recovery is burgeoning as a field because enterprises the world over are looking to shore up the defense of their data, which is threatened by natural and synthetic calamities.

Vendors like EMC (, ), IBM (, ) and HP and other providers of storage use such opportunities to sell information protection technology products, such as replication .

SunGard officials said in a conference call they still anticipate income per share in the range of $1.37 to $1.42 for 2004.

"We expect the separation of the businesses to have a positive impact on revenue growth over time," said Cristobal Conde, SunGard's president and CEO, on the call. "This spin-off is about creating two strong, independent companies positioned for growth. It's not about cost-cutting or downsizing. The focus is on growing and creating shareholder value."

The spin-off is expected to be completed by the end of the first quarter of 2005, pending the receipt of a favorable ruling from the IRS or an acceptable tax opinion.

Should it succeed, James C. Simmons, currently group CEO of SunGard Availability Services, will become president and CEO of the spin-off.

Michael J. Ruane, currently CFO of SunGard, will become CFO of the spin-off. Vice President and Controller Andrew P. Bronstein will succeed Ruane.

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