9 Harbinger and Premenos Merge in a Bid to Secure Better Placement

The Internet may or may not be leading us into a glowing future destined to transform the lives of each and every one of us, but this electronic "Wonderland" is changing commerce and keeping companies scrambling Red Queen-fashion-running as fast as they can just to keep in place.

Take, for instance, the October merger between Harbinger and Premenos Corporations. Harbinger has been a respectable electronic commerce provider; but to hit the Internet business fast and hard-and keep its place in the electronic commerce industry-it's been acquiring companies left and right this year. Harbinger is banking that having established products in today's tough markets is much more favorable than investing in R&D, followed by expensive, uncertain marketing efforts.

Premenos, on the other hand, having developed a good security product in its Templar encryption system, had yet to break into the first rank of vendors, despite some prestigious placements. It needed to move up, if it was going to reach the broader market.

Thus the October merger.

The stock market didn't like the news-Harbinger's NASDAQ-traded shares fell more than 25 percent on the announcement, from above 40 to under 30, before bouncing back very slightly. But analysts like IDC's Paul Johnson, who covers Internet commerce for the Framingham, MA, consultancy, discount that reaction. "From a product standpoint, it absolutely makes Harbinger stronger, and a more dangerous competitor," he says. "They're definitely an established EDI player, but they were not the dominant player, and this gives them a shot at becoming a dominant player. And while it doesn't change the existing market for EDI, it does illustrate the impact the Internet is having on the electronic commerce business." So at least the Internet is leading some of us into a glowing future. A.Reinbach