Lee Data
Lee Data was an American computer hardware company known for lower-cost, IBM 3270-compatible data-terminal systems.
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Overview
Lee Data Corporation was an American computer hardware company founded in Minnesota in 1979 by John M. Lee and John Roy, two former employees of Data 100 Corporation. The company was created to develop and sell data-terminal systems compatible with IBM mainframes, particularly systems based on the IBM 3270 terminal architecture. Its products generally combined multiple display terminals with a controller and printer, allowing organizations to connect groups of users to central computer systems. The company’s early strategy was to compete with IBM by offering compatible equipment at lower prices while introducing design and functionality improvements. With start-up capital obtained with assistance from former Data 100 executive Ed Orenstein, Lee Data established manufacturing operations in Eden Prairie, Minnesota. It grew rapidly during the early 1980s, moving from first-year revenue of $631,000 to fiscal 1982 revenue of $13.6 million and its first reported profit of $1.9 million. The company completed an over-the-counter public offering in November 1982. By the end of 1983, annual revenue had exceeded $50 million, and Lee Data held an estimated four percent of the American data-terminal market. The Bell System was its largest individual customer, accounting for approximately one-quarter of sales, and the Regional Bell Operating Companies remained important customers after the 1984 breakup of the Bell System. Lee Data expanded through product development and attempted acquisitions. Its offerings included IBM 3270-compatible terminal systems, cluster controllers, file-transfer software, and related computing equipment. The company also obtained patents and designs from the failed acquisition of Visual Technology and completed development of the System 2000, a computer based on an Intel 80286 design. In January 1986, Lee Data successfully acquired Datastream Communications and Phaze Information Machines, adding controller, networking, file-transfer, and IBM-compatible terminal capabilities. The company’s growth weakened in the second half of the 1980s. Price competition, including pressure from IBM, reduced margins and contributed to layoffs, a hiring freeze, and operating losses. Employment reached approximately 1,128 workers in early 1985, but Lee Data cut 106 positions that January. By 1987, sales had declined and quarterly operating losses had reached $1.3 million. Several founding executives departed, and the company sold its United Kingdom subsidiary to Olivetti in early 1988. Lee Data attempted to reduce its dependence on terminal hardware by developing specialized networking software, but the decline in its core market continued. In October 1989, it announced the elimination of 260 positions from a workforce of 913 after projecting an $18 million quarterly loss; its fiscal 1989 losses were reported at between $45 million and $50 million. In February 1990, Lee Data sold its terminal assets to Intelligent Information Systems for $8 million. Founder John M. Lee also resigned as chairman, chief executive officer, and president. The company changed its name to Apertus Technologies, Inc. in July 1990 and shifted toward terminal-emulation software, reducing its workforce from 650 employees in February to 275 in July. Under chief executive Robert Gordon, the renamed company recovered commercially. By 1994, Apertus was reported to be the second-largest terminal-emulation vendor, with approximately 25 percent market share, revenue of $26.9 million, and profit of $4.5 million. In 1997, Apertus sold its terminal-emulation assets to Computer Network Technology Corporation and acquired Carleton Corporation, a Minneapolis developer of data-warehousing software. It subsequently operated under the Carleton name. Oracle Corporation acquired the business in 2000 through a stock transaction reported at $8.7 million, ending the independent corporate history that had begun with Lee Data.
History
Lee Data Corporation emerged from the Minneapolis computer-industry community in early 1979. Its founders, John M. Lee and John Roy, had worked at Data 100 Corporation, a manufacturer of data terminals and peripherals for IBM mainframes and midrange systems. After Data 100 was acquired by Northern Telecom in January 1979, Lee and Roy established their own company. They obtained start-up backing from Ed Orenstein, a former colleague and executive, and began developing a family of systems compatible with IBM’s 3270 terminal environment. The new company initially operated from a 21,000-square-foot facility in Eden Prairie, Minnesota. Its systems were designed around the same general architecture as IBM’s offerings: multiple display terminals connected to a controller, often with a printer. Lee Data sought to make these systems less expensive while adding practical improvements. The strategy gained traction quickly. The company recorded $631,000 in revenue during its first year, then reported $13.6 million in revenue and $1.9 million in profit for fiscal 1982. Its November 1982 over-the-counter offering helped fund further expansion. By the end of 1983, revenue had passed $50 million and the company held about four percent of the American data-terminal market. The Bell System was Lee Data’s largest customer, representing about one-quarter of sales. Following the breakup of the Bell System in 1984, the Regional Bell Operating Companies continued to provide significant business. Lee Data also pursued growth through acquisitions. A proposed purchase of Wordtronix in 1983 was abandoned, although Lee Data took a 19 percent stake in that company. The proposed acquisition of Visual Technology, announced in late 1983, failed in January 1985. Lee Data paid a cancellation fee and acquired selected Visual Technology patents and designs, including work related to an unrealized Intel 80286-based system. Lee Data completed that development and marketed it as System 2000. In January 1986, Lee Data successfully acquired Datastream Communications and Phaze Information Machines. Datastream brought cluster-controller and file-transfer capabilities, while Phaze expanded the company’s IBM-compatible terminal portfolio. These moves broadened the product range, but they did not resolve the company’s exposure to the increasingly competitive terminal market. Employment peaked at approximately 1,128 workers in early 1985, when Lee Data also announced 106 layoffs because of weak performance and price pressure from IBM and other competitors. Around 1987, employment remained near 1,100, but declining sales and quarterly operating losses led to a hiring freeze. Four members of the company’s founding executive group had resigned by the end of that year, and the United Kingdom subsidiary was sold to Olivetti in early 1988. Lee Data tried to offset declining hardware demand by developing specialized networking software. The effort was insufficient to halt the deterioration. In October 1989, the company announced 260 layoffs from a workforce of 913 following a projected quarterly loss of $18 million. Reported losses for fiscal 1989 reached between $45 million and $50 million, substantially worse than the prior year. A major restructuring followed in 1990. In February, Lee Data sold its terminal assets to Intelligent Information Systems for $8 million. John M. Lee resigned as chairman, chief executive officer, and president at the same time. In July, the company adopted the name Apertus Technologies, Inc. and concentrated on terminal-emulation software. The workforce fell from 650 employees in February to 275 in July. Under Robert Gordon, Apertus recovered and by 1994 had become the second most popular terminal-emulation vendor, with a reported 25 percent market share, $26.9 million in revenue, and $4.5 million in profit. The company changed direction again in 1997. Between October and November, Apertus sold its terminal-emulation assets to Computer Network Technology Corporation and acquired Carleton Corporation, a Minneapolis developer of data-warehousing software. It subsequently used Carleton as its trade name. Oracle Corporation acquired the business in 2000 through a stock swap reported at $8.7 million. Lee Data therefore survives primarily as the origin of a corporate lineage that passed through Apertus Technologies and Carleton before becoming part of Oracle.
- 2000
Acquisition by Oracle
[1]Oracle acquires Apertus, operating under the Carleton name, through a stock transaction.
- 1997
Transition to the Carleton business
[1]Apertus sells terminal-emulation assets and acquires Carleton Corporation, shifting its focus toward data-warehousing software.
- 1994
Apertus reaches second place in terminal emulation
[1]Apertus is reported to hold approximately 25 percent of the terminal-emulation market and to have returned to profitability.
- 1990
Terminal assets divested and name changed to Apertus
[1]The company sells its terminal assets, loses founder John M. Lee as chief executive, and pivots to terminal-emulation software under the Apertus Technologies name.
- 1986
Datastream and Phaze acquisitions
[1]Lee Data acquires Datastream Communications and Phaze Information Machines, expanding its controller, file-transfer, and terminal businesses.
- 1985
System 2000 development
[1]After the failed Visual Technology acquisition, Lee Data acquires relevant patents and designs and develops the System 2000.
- 1983
Rapid expansion in the terminal market
[1]Annual revenue exceeds $50 million and Lee Data reaches an estimated four percent share of the American data-terminal market.
- 1982
First reported profit and public offering
[1]Lee Data reports $13.6 million in fiscal revenue and $1.9 million in profit, then completes an over-the-counter offering in November.
- 1979
Lee Data is founded
[1]John M. Lee and John Roy establish Lee Data in Minnesota to develop IBM 3270-compatible terminal systems.
Products and positioning
A lower-cost alternative to IBM mainframe terminal equipment, differentiated through compatibility, product innovation, and later a transition into terminal-emulation and networking software.
Data-terminal systems · 1979
IBM 3270-compatible terminal systems
Lee Data’s core products were families of display-terminal systems designed to work with IBM mainframe environments using the 3270 architecture. A typical installation combined several glass display terminals with a controller and printer. The products competed with IBM’s own equipment by emphasizing compatibility, lower pricing, and design innovations.
Networking and communications equipment
Cluster controllers and file-transfer software
Through its own development and the acquisition of Datastream Communications, Lee Data offered equipment and software for managing groups of IBM-compatible terminals and moving files between connected systems. These products extended the company beyond individual display units into broader communications infrastructure.
Computer system · 1985
System 2000
System 2000 was developed from patents and designs obtained after the failed Visual Technology transaction. Lee Data completed the Intel 80286-based project and marketed the resulting computer system in 1985, representing an attempt to broaden the company beyond conventional terminal hardware.
Enterprise software · 1990
Apertus terminal-emulation software
After divesting its terminal hardware assets in 1990, the company operated as Apertus Technologies and concentrated on software that emulated terminal functions. The repositioning reduced dependence on physical terminals and helped the business regain market share and profitability during the early 1990s.
Data-management software · 1997
Carleton data-warehousing software
Following the 1997 acquisition of Carleton Corporation, the business shifted toward data-warehousing software and adopted Carleton as a trade name. This software-oriented phase preceded Oracle’s acquisition of the company in 2000.
Brand decisions
2000
Acquisition by OracleM&ABackground
The business was operating under the Carleton name after Apertus had moved into data-warehousing software.
Action taken
Oracle Corporation acquired the company through a stock swap reported at $8.7 million.
Aftermath
The independent corporate lineage descended from Lee Data ended under Oracle ownership.
Reported acquisition value. $8.7 million (2000)
1997
Shift from terminal emulation to data warehousingStrategyBackground
Apertus reassessed its position in terminal-emulation software and sought a new software-oriented business direction.
Action taken
It sold its terminal-emulation assets to Computer Network Technology Corporation and acquired Carleton Corporation, a data-warehousing software developer.
Aftermath
The company adopted Carleton as a trade name and remained on that trajectory until Oracle acquired it in 2000.
Terminal-emulation asset sale value. $11.4 million (1997)
1990
Divestiture of terminal hardware and pivot to softwareStrategyBackground
Falling terminal sales, heavy price competition, and large losses made Lee Data’s hardware-centered business increasingly difficult to sustain.
Action taken
Lee Data sold its terminal assets to Intelligent Information Systems for $8 million, changed its name to Apertus Technologies, and focused on terminal-emulation software.
Aftermath
The workforce was sharply reduced, but the software strategy later helped Apertus recover market position and profitability.
Terminal-asset sale value. $8 million (February 1990)
1986
Acquisition of Datastream Communications and Phaze Information MachinesM&ABackground
Lee Data needed to broaden its terminal and communications portfolio as competition increased in the IBM-compatible equipment market.
Action taken
The company acquired both businesses and paid their shareholders a combined $4 million.
Aftermath
Lee Data added cluster controllers, file-transfer software, and additional IBM-compatible terminal capabilities.
Combined shareholder payment. $4 million (January 1986)
1985
Termination of Visual Technology acquisitionM&ABackground
Lee Data had announced a stock-based acquisition of competing terminal maker Visual Technology in 1983.
Action taken
The acquisition collapsed shortly before completion. Lee Data paid $3 million in cancellation fees and acquired selected Visual Technology patents and designs.
Aftermath
The acquired intellectual property contributed to the development of System 2000.
Cancellation fee. $3 million (1985)
1983
Abandonment of proposed Wordtronix acquisitionM&ABackground
Lee Data sought to acquire Wordtronix, another company founded by former Data 100 employees and a competitor in IBM-oriented word-processing systems.
Action taken
The proposed $6.4 million stock transaction was cancelled, and Lee Data instead acquired a 19 percent interest in Wordtronix.
Aftermath
Lee Data did not absorb Wordtronix, leaving the companies separately operated.
Proposed transaction value. $6.4 million (1983)
Recent events
- 2000
Oracle acquires Apertus, doing business as Carleton[1]
M&A
Oracle acquired the renamed business through a stock transaction, bringing the company’s independent corporate history to an end.
- 1997
Apertus sells terminal-emulation assets and acquires Carleton[1]
M&A
Apertus divested its terminal-emulation assets to Computer Network Technology and acquired Carleton Corporation, a data-warehousing software company.
- 1990
Lee Data sells terminal assets and becomes Apertus Technologies[1]
M&A · Leadership change
The company sold its terminal assets to Intelligent Information Systems, accepted the resignation of founder John M. Lee, and changed its name to Apertus Technologies later that year.
- 1989
Lee Data announces major layoffs after projected loss[1]
Other
Lee Data announced 260 layoffs from a workforce of 913 after projecting an $18 million quarterly loss.
- 1988
Lee Data sells its United Kingdom subsidiary to Olivetti[1]
M&A
The sale formed part of a broader retrenchment as the company faced declining sales and losses.
- 1986
Lee Data acquires Datastream Communications and Phaze Information Machines[1]
M&A
The company acquired both businesses for a combined shareholder payment of $4 million, expanding its terminal, controller, and file-transfer capabilities.
- 1985
Visual Technology transaction collapses and patent deal follows[1]
M&A · Product launch
After the proposed merger failed, Lee Data paid a cancellation fee and acquired patents and designs that contributed to the System 2000 product.
- 1985
Lee Data announces workforce reductions amid weak results[1]
Other
The company eliminated 106 positions after poor financial performance and increasing price pressure from competitors including IBM.
- 1983
Lee Data abandons proposed Wordtronix acquisition[1]
M&A
The proposed stock transaction was called off, after which Lee Data acquired a minority stake in Wordtronix instead.
- 1983
Lee Data announces Visual Technology acquisition[1]
M&A
Lee Data proposed acquiring Visual Technology, but the transaction ultimately collapsed before completion.
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