Loudcloud to buy small rival

Managed service provider Loudcloud Inc. Thursday made the first acquisition in its short history, scooping up a small rival whose customers include Pioneer Electronics Inc. and the music division of Wherehouse Entertainment Inc.

In an all-stock transaction, Loudcloud agreed to acquire Frontera Corp., a privately held managed service provider in Los Angeles. Terms of the deal weren't disclosed.

Sunnyvale, Calif.-based Loudcloud was founded in 1999 by former Netscape Communications Corp. whiz Marc Andreessen, who serves as its chairman. The company supports customers with Opsware, its management services platform. However, it has consistently lost money from its operations.

The company was one of a small handful of Internet-related start-ups to go public last year when investors began to shy away from funding losing companies. From its March initial public offering, the company raised $150 million, adding to about $200 million raised from investors.

Loudcloud had $140 million in cash and cash equivalents at the end of the third quarter, the company said at that time.

The acquisition of Frontera will increase the company's customer base and expand its reach to a new regional market, Loudcloud said in a statement. The company's roster already includes Fannie Mae, News Corp. and Ford Motor Co.

The acquisition is expected to be completed in the second quarter, the company said.

Copyright © 2002 IDG Communications, Inc.

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