Contact: Scott Denne
Lionbridge Technologies angles for diversity with the $77m acquisition of fellow language translation technology firm CLS Communication. The target doesn’t add much growth to Lionbridge – both companies have seen single-digit revenue gains over the past couple of years. But it does help it diversify into additional verticals and customers just as its overreliance on Microsoft as a customer is hurting it.
Revenue at Lionbridge dropped 4% year over year last quarter as Microsoft, the company’s largest customer, cut back on spending as part of its restructuring. Adding CLS, which is strong in the financial services and life sciences segments, decreases Lionbridge’s reliance on the tech and manufacturing industry and lowers the risk of another Microsoft-induced down quarter.
The deal values the target at 0.9x trailing revenue, about twice what Lionbridge commands. Despite that, Wall Street is reacting well to the purchase – Lionbridge’s stock is up 20% today, even after giving Q4 revenue guidance below analysts’ expectations.
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