[THIN] Tarantella Buys New Moon!

From: "Jim Kenzig http://thethin.net" <jimkenz@xxxxxxxxxxxxxx>
To: <thinnews@xxxxxxxxxxxxx>, <thin@xxxxxxxxxxxxx>
Date: Tue, 10 Jun 2003 18:19:16 -0400
Tarantella Buys New Moon
Two server-based computing runners-up join forces to take on the industry
leader, Citrix Systems.
by Allen Bernard, Thin Planet
June 2003



In a surprise move, infrastructure provider Tarantella announced it is
purchasing occasional rival New Moon.

Citing "common synergies" as the primary reason, Tarantella's Chief
Evangelist, Guy Churchward, told Thin Planet the all-stock deal makes sense
from a number of other perspectives, as well. Most notably, New Moon's
solution for Windows, Canaveral iQ. Tarantella's Unix/Linux based solution
can Web-enable Windows applications, but requires a degree of finagling
which New Moon's solution, which is aimed solely at Window's installations,
doesn't require.

"We don't have a Windows-only offering," he said. "It's very difficult for
us to go to an account when we find somebody that is a pure Windows play
that's looking for an NT installation. We actually haven't been able to
fulfill that."

To facilitate the deal, Tarantella will issue 7.9 million shares of common
stock and, on June 5, the day the transaction is scheduled to close, do a
5-to-1 reverse stock split to keep its $0.46 per-share stock price from
plummeting further. This will also help the company, which is in danger of
delisting, continue to trade on the NASDAQ small cap market. After the
split, Tarantella will have 9.8 million shares outstanding.

To sweeten the pot, Tarantella will also pay royalties of no less than $2
million to current New Moon stakeholders -- New Moon is privately held --
over the next three years.

For New Moon, the deal is all about reach. Marc Lowe, New Moon's CEO, told
ASPnews that while the company is doing well on its own, to reach into the
enterprise market requires a partner who is already there.

"If you look at Tarantella's reference list in the US they have Citibank,
they've got Oracle ... You have to get the reference account in order to get
the next one," he said. "So, it was sort of a channel issue for us."

What Tarantella will get is a new product line, New Moon's brands (which the
company intends to continue for the foreseeable future) and $3 million in
cash to bolster its coffers. The $3 million will easily offset anticipated
deal costs of $500,000 to $700,000, said Churchward.

"It was a good exchange because we ended up with basically good technology,
good guys, and cash in the bank," Churchward said. "I talked to a couple of
our major shareholders yesterday and they believe it's extremely positive."

Although an undetermined number of employees will invariably be let go,
Churchward said Tarantella's plan is to move slowly, retaining New Moon's
Santa Clara, Calif., operations center and as many employees as possible so
as not to end up on the rocks like so many other IT mergers over the past
few years. Eventually, both operations will be combined at Tarantella's
headquarters in Santa Cruz, Calif.

Lowe and New Moon co-founders Ed Lau and Prashant Navare will be among those
transferring to Tarantella.

"We don't want to do one of these disastrous mergers where we sort of kill
off everything," he said. "So, if you go to (New Moon's) Web site and our
Web site you'll find that the messaging is the same but the brand and
identity is different in theirs."

Tarantella will inherit New Moon's 200 VARs and customers as well as a
product suite, Canaveral iQ, that will place the company squarely in the
crosshairs of industry leader Citrix, its main rival, as it strives to reach
promised break-even at the end of September. Because the two companies do
compete head-to-head with their products, and since Tarantella will actually
end up cash positive in the deal, Churchward sees little trouble achieving
this goal even with all the work ahead.

The biggest challenge in meeting the September deadline is turning pilot
installations into full-fledged roll-outs, said Churchward. That and
conquering market apathy.

"That's the challenge we have -- everything we seeded -- to turn that from
pilots and proof-of-concepts into critical roll-outs. We've got an extremely
loyal customer base, we just need to switch the whole thing on."




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[THIN] Tarantella Buys New Moon!

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