Idiom surprised most of its customers, LSP partners, and software partners this week with the announcement that it had sold itself to rival translation management supplier SDL. Here is a summary of what has happened since Monday.
- Our survey shows a generally negative reaction to the deal. In a short survey we conducted this week, we asked “What impact do you think SDL's acquisition of Idiom will have on the language industry?” Thirty-five percent of corporate buyers thought that the deal was good or very good, while 60% felt it was bad or very bad. Nearly three-quarters of LSPs thought that the deal was bad or very bad for the industry.
- Our roundtable found widespread concern among buyers and LSPs. On 13 February we held a 90-minute webinar with over 140 participants representing all major constituencies and most continents. Attendees expressed disappointment in Idiom's loss of independence; voiced concern over the anti-competitive nature of the deal; asked about the roadmap for SDL, Trados, Tridion, and Idiom products; and reiterated a long-standing concern about LSPs buying technology from a services rival.
- SDL is rationalizing the 2 companies. SDL has already started to trim the fat, laying off about a quarter of Idiom's staff — mostly in support functions such as marketing, finance, and administration. A week prior to the acquisition, SDL made redundant some of its own marketing people in the U.K. Last fall, the chief marketing officer of SDL and vice president of marketing at Idiom left their respective companies.
- Competitors and partners have begun to react. Almost immediately following the announcement of the acquisition, Translations.com announced its “safe passage program” for Idiom and SDL/Trados customers. In short order, across trumpeted its claim as the “only remaining independent provider for translation management software,” Elanex announced its Elanex Inside end-to-end translation service and technology solution, and thebigword opined on the acquisition and offered its LanguageDirector TMS for consideration. Clay Tablet pushed its technology as a way to future-proof and acquisition-proof translation management processes. Expect a press release from Lionbridge and other competitors before the week is out — and a flurry next week as slower-to-react rivals revise their positioning. We wouldn't be surprised if formerly commercial, now captive solutions such as Ambassador (né GlobalSight, now part of Irish LSP Transware) resurface as commercial offerings.
- The City weighed in. Financial analysts at Kaupthing Bank reiterated their “buy” rating on SDL, noting that they expected the Idiom acquisition “to boost the company's enterprise software offerings.” However, they reduced the target price from 420p to 340p to reflect “the significant de-rating in the sector.” Meanwhile, no major media carried news of the acquisition.
Finally, yesterday we published an 8-page report titled “SDL Buys Idiom: Now What?” Available to Common Sense Advisory members and webinar attendees, this report provides an analysis of the benefits and challenges to SDL following the acquisition; advice to corporate buyers of Idiom; recommendations to LSPs who feel stranded by the deal; 4 scenarios about the future of the translation business; and a reiteration of our long-standing recommendation to SDL to break itself into 2 companies.
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