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Schlumberger’s campus card division to be acquired by ESD

For nearly two years, rumors have abounded regarding SchlumbergerSema’s desire to sell its campus card division. It appears that a buyer has been found in the Ft. Washington, PA-based ESD Inc. and a sale is apparently eminent. Although not officially announced, inside sources from both companies have told CR80News that an agreement has been reached and discussions are underway with Schlumberger’s campus division employees as final contracts are negotiated.

The campus division was created in March of 1995 when Schlumberger acquired Moorstown, NJ-based Danyl Corp. Long one of the campus card industry’s leading manufacturers of card readers and devices?, Danyl originally built vending readers, copier controllers, laundry controllers, and revalue stations that worked with offline magnetic stripe cards. In 1993, the company built a smart card reader for the MAC bank network. This attracted the attention of Schlumberger, a world leader in the manufacture of smart cards and applications, and the acquisition quickly followed.

Danyl’s hardware portfolio was added to Schlumberger’s application development and card manufacturing capability. The company now had the first end-to-end campus stored value smart card system. In August of 1995, just months after the acquisition, Western Michigan University and the University of Michigan installed the technology and became leading proponents for smart cards in higher education. A handful of other campuses in the area followed their lead installing the Schlumberger smart card technology.

Fastforward to 2000 and the campus division, while maintaining revenues and customer base, had failed to grow significantly. At the time of the Danyl acquisition, Schlumberger already had revenues of $7.6 billion–much of it from the company’s petroleum division. The campus card division was never more than a spec on the company’s bottom line. Rumors of the intent to sell began to circulate.

Later that year, Schlumberger signed an agreement with now-defunct Cybermark to pick up responsibility for sales and service to the existing base of Schlumberger campus smart card clients (estimated to be about 15 institutions). When Cybermark closed its doors early this year, the responsibility for the clients was picked up largely by Schlumberger’s existing network of local resellers. This turbulent process has certainly been challenging for the customers.

In mid-October, CR80News received word of the ESD, Inc. deal. ESD is a company focused on the development and manufacture of equipment to the laundry market. Founded in 1969 by Harvey Gitlin, ESD pioneered the use of the modern coin slide in the U.S. Coin slides are the metal devices that accept coins for payment in laundry machines, billiards tables, and other unattended units. Prior to Mr. Gitlin’s product, coin slides in the U.S. accepted the coins horizontally rather than vertically. ESD’s vertical slides enabled more coins to be accepted and more pricing combinations to be charged. Over the past three decades, ESD’s slides have become the preferred variety and the company remains an industry leader. ESD also manufactures locks for laundry machines and moneyboxes for providing change in unattended locations.

In 1995 the company purchased an engineering firm located in Atlanta and built a smart card stored value system for laundry environments. They even purchased machinery to embed chips into cards–thus establishing themselves as their own card provider.

Speculation as to ESD’s intentions with the Schlumberger unit are numerous.

  • On one hand they simply purchased a competitor as Schlumberger has long had a solid focus on the laundry market.
  • Some suggest that ESD was seeking the lower end, lower cost magnetic stripe technology that existed from the early Danyl days. While the technology is less robust, it can be delivered at a lower cost than its chip card counterpart.
  • Others speculate that at the low cost of acquisition (estimated between $2 and $4 million), the ongoing revenues from the unit simply made it a good buy for a company looking to expand in an arena they already know.

What does this mean to the existing Schlumberger customers? The employees? The campus card market? No one within either company was willing to comment officially at the time of this printing. CR80News will continue to investigate the story and will keep you up-to-date as more information is announced.

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