Fast Search & Transfer

FAST, a Microsoft Subsidiary
Industry Information Technology
Fate Acquired by Microsoft
Founded July 16, 1997 (1997-07-16)
Headquarters Oslo, Norway
Area served
 Global
Key people
 John M. Lervik (Former CEO), Bjørn Olstad (CTO)
Products Search engines, enterprise search, information access, knowledge management
Number of employees
 750
Parent Microsoft
Website www.fastsearch.com

Fast Search & Transfer ASA (FAST) was a Norwegian company based in Oslo. FAST focuses on data search technologies. It had offices located in Germany, Italy, Sri Lanka, France, Japan, the United Kingdom, the United States, Brazil, Mexico and other countries around the world. The company was founded in 1997.

On April 24, 2008, Microsoft acquired FAST. FAST is now known as Microsoft Development Center Norway.

FAST offered an enterprise search product, FAST ESP. ESP is a service-oriented architecture development platform which is geared towards production searchable indexes. It provided a flexible framework for creating ETL applications for efficient indexing of searchable content. Fast also offered a number of search-derivative applications, focused on specific search use cases, including publishing, market intelligence and mobile search. The Search Derivative Applications (SDA) are built upon the Enterprise Search Platform (ESP). The company was developing PHAROS, a new European multimedia search engine.

Technology

Solutions

FAST delivers real-time search and business intelligence solutions, and currently has about 3,600 implementations. They offer a core search platform, FAST ESP, and develop solutions on top of the platform. FAST’s solutions are used in three areas; external (online and mobile), internal (information access and discovery) and OEM (embedded in other vendor’s solutions).

Some examples of their applications are:

Technology ownership

FAST uses complementary technologies from BBN Technologies for speech recognition and Stellent (now part of Oracle) for the conversion of different file formats.

As of 2007, FAST was being sued by a company which claims FAST, as well as Google, Yahoo, Facebook and other major web companies stole its technology.[1]

Research projects

Information Access Disruptions

Information Access Disruptions (iAD) is a Research Centre funded by the Research Council of Norway and the centre’s partners. The host institution is FAST, and the Research Centre Manager is Dr. Bjørn Olstad, adjunct professor at the Norwegian University of Science and Technology (NTNU) and Chief Technology Officer of FAST. iAd seeks to identify opportunities and develop the next generation search engines that can extract user-friendly information from vast and complex amounts of data. iAd also facilitates interaction between international content and technology suppliers.

Norwegian partners are the Norwegian University of Science and Technology, the University of Oslo, the University of Tromsø, the Norwegian School of Management, Schibsted and Accenture. International partners are Cornell University, University College Dublin and Dublin City University.

PHAROS

The European Commission (EC) is funding the research project “The Platform for Search of Audiovisual Resources Across Online Spaces” (PHAROS). The mission of PHAROS is to transform audiovisual search from a point-solution search engine model to an integrated search platform paradigm, incorporating future user and search requirements as key design principles.

History

1997–1999: Development

FAST was founded in 1997, and the initiation of the company stems from the Department of Computer and Information Science at NTNU. Professor Arne Halaas at NTNU was a substantial contributor in the early days of FAST. John M. Lervik, a student from NTNU, was one of the first employees at FAST. He took his doctorate under the supervision of Professor Tor A. Ramstad and eventually became the company's CEO, until January 2009.

During 1998 and 1999, FAST announced strategic alliances with Lycos, Dell and TIBCO, and the first commercial launch of products took place in 1999.

2000–2003: Commercialization

During 2000, FAST announced several new European and US customers and partners. The company’s IPO took place in June 2001, and FAST is publicly traded on the main board of the Oslo Stock Exchange (OSE) under the ticker symbol 'FAST'. The company continued over the next couple of years to announce new contracts with customers and partners such as eBay, IBM, BEA, Microsoft, Telus, Elsevier, and Broadvision. FAST was ranked number three on the 2002 Deloitte Technology Fast 500, a ranking of the 500 fastest-growing technology companies in Europe.

In 2003, FAST decided to focus on enterprise search, and sells their Internet division, including FAST Web Search, FAST PartnerSite and AlltheWeb.com, to Overture Services, Inc. (later acquired by Yahoo!).

2004–2007: Expansion

In January 2004, FAST introduced the FAST Enterprise Search Platform (FAST ESP.) to the market. During the following three years, FAST expanded its geographical reach by opening new offices in Asia, Middle East, Latin America and Africa, extended its partnership relations through the introduction of the FAST X10 partner program, and introduced new solutions aimed specifically at certain business areas, like FAST ImPulse for eCommerce and FAST AdVisor for Internet yellow pages and portals.

The company was for the first time placed in the Leader’s Quadrant of the Gartner Magic Quadrant for Information Access Technology in 2004, and stayed in the Leader’s Quadrant over the next years as well. The company almost quadrupled its revenues from 2003 (USD 42M) to 2006 (USD 162M).

FAST acquired Convera's RetrievalWare in August 2007 for USD 23 million.[2][3]

Fast's Q4 2007 Intra-quarterly update gave enterprise as 30% of its business (page 17). Its Q3 2007 enterprise licence revenues at less than $4M made it one of the less significant players in enterprise search market.

More recent developments

On July 30, 2007, FAST announced a reduction in revenue of 40% due to changes in financial controls on revenue recognition. It had been forecasting USD 55M of Q2 2007 revenue and profitability, in a statement on the company's website it revealed revenue would be reduced to USD 35M and it would be unprofitable. According to the company it had been recognizing revenue without signed contracts using Memoranda of Understanding. The shares fell 28% to hit a three-year low.[4][5]

This and other issues around lack of customer payment were raised by Goldman Sachs in a report June 2007 by Moawalla. Finansavisen newspaper on August 6, 2007 ran an article entitled "FAST under investigation again" reporting on an ongoing investigation by the unit of The Financial Supervisory Authority of Norway (Kredittilsynet) that oversees all listed companies’ financial reporting. On August 8 the company reported actual Q2 2007 numbers with revenue USD 34.1M (license sales down 41% sequentially and 24% y on y) and operating loss USD 38M.[6] As a result of this the company has announced that it will implement a layoff program of 20% of all staff,[7] reducing the quarterly operational cost base in excess of USD 12M,[8] as it tries to return to profitability. It expects to be unprofitable until 2008.

On September 5, 2007, FAST signed a deal with the Walt Disney Company's Parks and Resorts Online for the Fast Enterprise Search Platform including software licenses, maintenance fees and other services.[9] On September 7, 2007 FAST informed investors in their quarterly update that the predicted losses for Q3 would rise again to over $60M and that they would be concentrating remaining resources on the 'Monetization' or ad serving business served by their Ad Momentum platform. The defocussing on their older areas and concentration on their new market area was welcomed by the financial market.

Q3 2007 Results

Fast also received a further blow when a major customer Schibsted said they had made a too risky decision in choosing to implement their own web search engine and were changing their strategy going forward. "Ny søkemotor for Sesam". 

Investors and customers were hoping that the company would announce new accounting and quality controls in its Q3 report to reverse the slide. However, Fast, on 30 October, reported a loss of $100M (up from the expected $60M loss) in the quarter with another collapse of licence revenue down 55% year on year showing significant loss of software market share. The operation of the company as a software company rather than a services company was questioned by the gross margin falling to 67% from 83% a year earlier. The issues with customer non payment of bills by customers continued with $26M of debtors being written off."Fast Q3 2007 results". 

Board of Directors

The conduct of Fast's directors has been the subject of much comment in Norway. In January 2006, an article ran in the Norwegian IT paper that claimed that one of FAST's directors Tomas Fussel had made a 2000% markup for himself by buying a loss making company Hercules communications and selling it to the public company Fast 3 weeks later for a massive mark up.[10]

More recently, there has been controversy at the board level with one director resigning and another making public statements about other directors and major shareholders. Fast's board member Robert Keith said in a newspaper interview, "I ought to have seen the problems in Fast earlier. And I ought to have understood that Hans Gude Gudesen is a crazy liar. Also, I ought have shot Oystein Stray Spetalen the first time I met him. That would have helped a lot of people, says the controversial Brit to the paper Finansavisen."[11] Spetalen and Hans Gude Gudesen are both major shareholders in Fast. Furthermore, directors Keith and Fussel are allegedly being pursued by the Norwegian tax authorities for USD 50M in unpaid taxes the government says it is owed by them. In the event of non payment liability may fall on the company.

The ongoing turmoil has seen 3 directors resign from the board in the last month, the latest being Johan Fredrik Odfjell who is quoted in the company's release as saying "FAST faces many challenges and opportunities going forward".

On December 22, Orkla, FAST's largest shareholder, demanded an extraordinary general meeting to force Fussel and Keith off the board.

Need to Restate Accounts for 2006 and 2007

On 12 December 2007, the Oslo Stock Exchange suspended trading of FAST shares. The next morning the company announced it was reviewing the accounting utilized for the 2006 and 2007 reports with a likely outcome that this would be changed. In an article titled "Fast restates its accounts" www.dagensit.no stated that Fast's results for 2006 and 2007 may be restated in what it called "another clean up round." It also stated "The Search technology vendor Fast Search & Transfer have had several rounds with restating of accounts." Also after CFO Joseph Lacson some months ago declared that “everything is cleaned up”, one has found skeletons in the closet. Wednesday afternoon trading was suspended, after what the stock exchange called “certain conditions”.

Now the company flags that they will review their accounts, both for 2006 and 2007. Fast declares that they are performing a thorough review of revenue and depreciation both for closing of 2007, and adjustments of 2006 results." [12] The shares fell around 7% on the news.

Microsoft acquisition

On 8 January 2008, it was announced that the board of Fast had unanimously accepted a $1.2 billion takeover offer from Microsoft. Microsoft has secured the backing of Fast's two largest institutional shareholders, Orkla and Hermes Focus Asset Management Europe.[13]

As of 24 April, 97.37% of all Fast shares are controlled by MACS Holdings Limited, a wholly owned subsidiary of Microsoft Corp. The stock was delisted from Oslo Stock Exchange May 16, 2008. [14]

As more information is coming to light about the major restatement of the accounts it is being reported that Microsoft may not have completed its due diligence correctly. [15]

On 26 November 2008, it was reported that FAST Search laid off 25 employees as a result of the acquisition by Microsoft.[16]

On 2 December 2009, Microsoft Sells Part Of Fast Search To Rocket Software. Microsoft is selling Fast’s Folio and NXT businesses to Rocket Software; the complementary products are application suites used by businesses to publish and index reference material onto discs, network workstations, and online.[17]

Criminal Investigation

On 24 May 2008, Norwegian news website E24.no reported that the Financial Supervisory Authority of Norway had asked the police to investigate anomalies in the FAST accounts it had uncovered.[18]

Morning of October 13, 2008, Norwegian Økokrim raided Fast's offices in Oslo [19]

Under scrutiny by the Norwegian police for possible fraudulent behavior prior to the FAST acquisition by Microsoft, former founder and CEO John Lervik resigned from the wholly owned Microsoft subsidiary on 23 January 2009. CTO and Microsoft Distinguished Engineer Bjørn Olstad will assume Lervik's duties as the head of Microsoft's Enterprise Search Group.[20]

References

  1. ↑ Justis. "Justis reports on actions".
  2. ↑ Chillingworth, Mark (2 April 2007). "FAST swallows RetrievalWare, but Convera is still standing". Information World Review. Archived from the original on 25 May 2008.
  3. ↑ FAST Receives CFIUS Approval for Acquisition. Business Wire, Aug 13, 2007.
  4. ↑ FAST Search & Transfer. "Guidance for Second Quarter".
  5. ↑ Oslo Stock Exchange. "Interactive Graph".
  6. ↑ Forbes. "Fast Search & Transfer Q2 below forecasts on lower sales, higher bad debt". Archived from the original on June 10, 2008.
  7. ↑ FAST Search & Transfer. "FAST Announces Results of Strategic Operations Review".
  8. ↑ FAST Search & Transfer. "FAST Announces Results of Internal Operational Review Focus on Continued Market Leadership, Profitable and Sustainable Growth".
  9. ↑ Netcot.com. "Fast Search & Transfer ASA Makes Deal With Disney".
  10. ↑ dagens IT. "Fussels concealed FAST jackpot".
  11. ↑ Dagens Næringsliv (2007-11-01). "I ought have shot Oystein Stray Spetalen".
  12. ↑ dagens IT. "Fast restates its accounts".
  13. ↑ Acher, John (8 January 2008). "Microsoft bids $1.2 billion for Norway's Fast". Reuters. Retrieved 2008-01-08.
  14. ↑ "Microsoft's Voluntary Offer for Fast Search & Transfer ASA completed". Oslo Børs newsweb. 24 April 2008. Retrieved 2008-04-27.
  15. ↑ "The Fast and the Curious".
  16. ↑ "Microsoft's Fast Search cuts 17 jobs".
  17. ↑ "Microsoft Sells Part Of Fast Search To Rocket Software".
  18. ↑ E24. "Fast referred to Police".
  19. ↑ E24. "Fast Offices raided".
  20. ↑ "John Lervik resigns from Microsoft-FAST".

External links

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