SumTotal readies war chest for buyouts

California-based SumTotal Systems Inc, a provider of learning and business performance technologies with its R&D centre in Hyderabad, has readied a war chest to fund acquisitions.

SumTotal had, in April this year, raised funds aggregating $35 million (around Rs 143 crore) through sale of common stock. The capital will strengthen the company's balance sheet and allow it to grow within its core learning and performance management business, Donald E Fowler, chief executive officer, said here on Thursday.

"Besides, it will help us acquire companies in all-cash deals for expanding into other areas of talent management. We are primarily looking at firms that are typically in the recruitment management space. If any company that is into compensation management approaches us, we are ready to get it as well," he added.

Formed by merging US-based Docent and Click2Learn with itself in 2004, SumTotal had in 2006 acquired Mindsolve, a company with a patented talent management solution technology. It also acquired Pathlore Software Corporation, a learning management software and services provider, in 2005 for approximately $48 million (around Rs 196 crore).

Stating that India is a strategic part of the company with majority of its R&D being carried out entirely out of India at Hyderabad, Fowler said the Hyderabad centre would deeply be involved in bringing out new technologies and in developing software-as-a-service (SaaS) products. "We will have a new product rolling out of this centre in 2008," he said, while declining to share more details.

SumTotal employs over 800 globally, with 330 of them working out of Hyderabad. The company plans to scale this up to 350 by this December.

According to Fowler, SaaS has been the fastest growing business with perpetual licenses, and this hosted model contributed 50 per cent to its revenues last year.

SumTotal garnered revenues of $106 million (Rs 434 crore) in 2006 with six per cent as the bottom line. The company expects its profit to be in the range of 8 per cent this year, and reach a double figure next year, Fowler said.