Learn And Work TogetherLearn And Work Together

SmartForce plc earlier this month moved to expand its product line by acquiring Centra Software Inc., a maker of Web-collaboration software, in an all-stock transaction valued at $284 million. Analysts praise the move, but Wall Street is unimpressed.

SmartForce, which first established itself in the E-learning industry with popular IT training content and services, has expanded into the infrastructure market in recent years with learning-and content-management system offerings. The acquisition of Centra will let SmartForce compete in another E-learning market segment--online collaboration--with CentraOne, a popular suite of online collaboration and live E-learning applications.

Wall Street reacted swiftly to the deal, knocking SmartForce's stock price down 21% on Jan. 17, the day after the news was disclosed; it has yet to recover. But industry analysts say the deal will help the company serve customers who increasingly want complete, integrated E-learning systems.

"SmartForce now has nearly every E-learning offering except a high-end authoring tool," International Data Corp. analyst Mike Brennan says. "And I'm not sure they necessarily need that."

E-learning consultant and analyst Clark Aldrich calls SmartForce and Centra "the two best brands in the industry, with a lot of happy clients between them." Once Centra's online collaboration products are integrated into SmartForce's products, he says, the expanded line "will attract some new customers who just want to write one check a month instead of two."

Leon Navickas, Centra's chairman and CEO, will head research and development for the new company as the chief technology officer. His first job will be to oversee the integration of the two products, he says, and then work with an R&D budget of more than $60 million to develop new products and services. "We had some great partnerships with other E-learning system suppliers," Navickas says. "But it's still very difficult and complicated to put together systems."

The E-learning industry is consolidating "because what customers want is an end-to-end solution," IDC's Brennan says. "I'm not sure SmartForce has it now, but they have a lot more than anything else."