Eighteen months into its financial turnaround plan, computer firmware provider Phoenix Technologies of Milpitas, California, (NASDAQ: PETC) has signed a definitive agreement to pay $22.1 million in cash and stock for privately-held BeInSync, (DEMO 04 as DataPod) an Israeli-based software-as-a-service (SaaS) company. BeInSync provides about five million users an all-in-one way to synchronize and back-up any type of computer file. The companies expect to close the deal in April.

BeInSync subscribers install its software service on their computers at work and home, creating a private data network that allows them to seamlessly synchronize, share, access, and backup digital documents, photos, music, or video. Phoenix sells firmware, also known as core system software, the layer between a computer's operating system and its processors, and software services to improve utility and security for Windows-based personal computers.

Richard W. Arnold, Phoenix's chief financial officer and chief operating officer, said his management team was motivated to buy BelnSync because "those guys are the best in the world at peer-to-peer synchronization." Other important factors are that BeInSync has an e-commerce front end as well as software synchronization and back-up services that Windows-based personal computer makers want so they can differentiate products coming to market next summer, Arnold said.

By integrating BeInSync's Web-based, peer-to-peer sharing and synchronization technology, Phoenix can provide personal computer makers with synchronization capabilities embedded in the core firmware; the ability to have files and emails automatically sent to a user's choice of computers (instead of emailing yourself); instant backup of files as soon as they are created; and secure file sharing so people aren't dependant on a single Windows-based personal computer for files. BeInSync technology alleviates people's concerns about the loss of important files and gives them freedom to access their data from any Internet-connected computer, Arnold said.

"We believe this combination of Phoenix and BeInSync is really complimentary," said Adi Ruppin, BeInSync's vice president of marketing. "Phoenix's new initiatives are close to what BeInSync does so we can bring a lot of value. Together with our technologies we can do some great things and their relationships will give BeInSync a lot of traction."

Earlier this month, SanDisk introduced its SanDisk FlashBack Adapter with a BeInSync option for backing up content online. SanDisk's new Cruzer Titanium Plus USB flash drive also includes BeInSync.

Ruppin said the deal will keep BeInSync's 30-person workforce and its Israel research and development operations intact. Once the deal closes, Sharon Carmel, BeInSync founder and vice president of research and development, will join Phoenix as vice president and chief scientist of synchronization and continuity solutions.

Phoenix sells to computer maker Lenovo Pte. Ltd. (formerly IBM ThinkPads) and the top five computer board makers - Quanta Computer Inc. (Phoenix's largest customer), Compal, Wistron, Gigabyte, and Inventex, all based in China. Their boards are in computers made by Hewlett-Packard, Dell, Acer (which owns Gateway), Fujitsu, Sony and others.

Phoenix firmware competes largely with in-house research departments of computer manufacturers as well as independent suppliers such as privately-held American Megatrends Inc. and Insyde Software Corp., a public company based in Taiwan. Most of Phoenix's sales have been outside the U.S., while the majority of BeInSync's customers are in the U.S. Most of Phoenix's approximately 350 employees work in Taiwan, China, and India. Last year the company cut its employees by 24 percent and closed offices in Norwood, Massachusetts; Milpitas; China; Japan, and Taiwan.

Eighteen months ago, Arnold, Woodson M. Hobbs, president and chief executive officer, and Gaurav Banga, Ph.D., senior vice president of engineering and chief technology officer, took over managing Phoenix when it was losing $15 million on revenues of $8 million a quarter.

They have experience with synchronization products. Previously, they were part of the management team that turned around failing Intellisync Corporation and sold it to Nokia for $500 million in 2006. In the 1990s, Hobbs and Arnold also were members of the management team that automated stock brokering for Charles Schwab Corp.

In fiscal year 2007, Phoenix reported a net loss of $16.4 million (63 cents a share), and a negative net cash flow from operations of $2.4 million for the year. Although it achieved GAPP positive cash flow in the first quarter this year. Phoenix is not a widely held by individuals -- most of its approximately 176 shareholders are institutions. Phoenix stock has been trading around $15.60 a share, up from $4.50 a share when Hobbs' management team took over.

New Phoenix flagship products are AwardCore, SecureCore, FailSafe, and HyperSpace. Started in 1983, Phoenix has shipped more than one billion systems.