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Microsoft to Purchase FAST Search Software Firm for $1.2B

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Microsoft to Purchase FAST Search Software Firm for $1.2B

Microsoft has revealed a deal today in which they will buy Fast Search & Transfer (FAST), an 11-year-old Norwegian data classification and search engine provider. The Redmond-based software giant will pay up to $1.2 billion in cash for outstanding shares of FAST, which is presently traded on the Oslo Stock Exchange under the symbol FAST.

The two largest institutional shareholders of FAST, which control 37% of the outstanding shares, have approved the transaction. The deal is expected to close in the second quarter of 2008.

FAST’s search technology forms the underlying base of a range of enterprise web search engines. Most notably it is incorporated in Microsoft’s Windows Marketplace, and is part of CommVault’s Simpana software for back-end storage. FAST also has hundreds of other partners including a number of storage OEMs, and competes with offerings from Google and Autonomy, as well as smaller search and classification firms such as Index Engines.

FAST’s technological solutions are high-end and customized, with pretty lofty license and maintenance fees. Average license feels range from $300,000 to $600,000, with annual maintenance fees starting at $60,000.

The company’s primary focus at this point is “monetization”, or the use of search engines embedded in applications for financial transactions.

In 2007, FAST reported sales in monetization accounting for 70% of revenues, and enterprise search engine sales making up the other 30% of sales. For 2008, FAST projects $200 to $210 million in revenue, which is about a 10% market share of what IDC is forcasting will be a total $2.1 billion spend on corporate search applications in 2008.

Presently, FAST claims over 3,500 installations with high-end customers around the world, including such big names as ING, Pfizer, Bayer, Merrill Lynch, and more.

Exactly what Microsoft plans to do with FAST’s products, or how they plan to incorporate them, is not yet clear. However, FAST CEO John Lervik hinted at the possibility today, stating:

“By joining Microsoft, we can benefit from the momentum behind the SharePoint business productivity platform to really empower a broader set of users through Microsoft’s strong sales and marketing network. It validates FAST’s momentum and leadership in enterprise search.”

Another unknown at this point is whether CEO John Lervik will stay on board at Microsoft, or how many of the company’s 750 employees around the world will also transfer over to Microsoft.

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