Dialog Spins Out Sparza Amid Debt Fears

Computergram International, August 24, 1999

Dialog Corp, the debt-ridden UK-based online information provider, has spun out its e-commerce software operation as Sparza Ltd in a move likely to lead to an IPO of the new offshoot. The launch of Sparza is an attempt, before today's publication of Dialog's interim figures, to show that the company can create valuable assets out of its intellectual property. Analysts have been deeply skeptical about Dialog given that its 160m pound ($258m) debts comfortably exceed its 129.6m pound ($209m) market capitalization.

Quoting New York-based Datamonitor figures forecasting that business-to-business e-commerce will account for 78% of the $2.8bn e-commerce software market by 2002, Dialog chief executive Dan Wagner claims that Sparza could deliver "more targeted solutions" than competitors Ariba Inc and Commerce One Inc.

While Sparza is confident that the modules in its package will enable users to tailor their web sites more closely to the needs of customers, the blunt fact is that this is a proving year for the software which will not be rolled out generally until 2000. The company did announce a deal with Spicer, said to be Europe's largest office products wholesaler, which will offer the technology to its resellers, but this is currently at the pilot stage.

Dialog shares rose 3.5% to 88.5 pence on news of the deal. But until Sparza generates the kind of revenue that will guarantee a successful IPO, the spin-out would seem to offer little but a promise that it will help to counter-balance the company's debts.