SumTotal to invest $8mn over 2 yrs

The Nasdaq-listed $ 60 million SumTotal Systems, a business performance and e-learning software provider, today said they expected to invest close to $8 million in its Indian operations, in Hyderabad, over two years.

SumTotal, formed after the merger of two Nasdaq listed companies, Docent and Click2learn, also announced that it expected to achieve close to $18 million in cost synergies, $3 million more than expected when the two companies announced their decision to merge five months back.

Addressing a press conference in the city, Sudheer Koneru, senior vice-president, international operations, said the company, which had a development-cum-tech support centre in Hyderabad, expected to scale up its India operations substantially and spend $8 million in operational and capital expenditure related expenses.

"The Indian office is our largest operation worldwide and we expect to add another 30 employees to our existing 130 very soon," Koneru said. The company expects to move customer and technical support and engineering work fully to India.

"We will see continued growth in research and development and services. The only issue that could hamper growth is being able to attract good talent," Sitaram Raju, managing director of SumTotal's Indian operations said.

The company, which operates in the $1 billion e-learning space, is the market leader and double the size of its closest competitor, SABA, and the merger has seen its market captialisation on the Nasdaq touch a new high of close to $160 million.

When the merger between Docent and Click2learn was announced, it was expected that the two will be able to achieve cost synergies of about $15 million.

"We expect to achieve cost synergies of between $2 million and $3 million by third quarter of 2004, and because of this we expect to be cash-flow neutral in the second quarter of 2004, and cash flow positive in the third quarter," Koneru said.

The $15 million in savings are expected to include $1 million in cost of revenues, $3 million in research and development expenses, $7 million in sales and marketing expenses, and $4 million in administration costs.