Six months have passed since the week that shook the translation world with the acquisitions of Bowne Global Solutions by Lionbridge and of Trados by SDL. Last month, Lionbridge and SDL officially announced their results for 2005.

These are the first financial statements to reflect those acquisitions — and the numbers look good. Instead of dashing off to analyze the numbers (which are geared towards shareholders and investors, anyway) we studied the financials for their impact on the language services industry.

Both firms show healthy gross margins, cash reserves, and significant improvement from the previous year in most indicators. What’s driving their performance are operational efficiencies and heavy investments in sales and marketing. Both companies are singing the “Low Cost, High Tech” chorus from the same hymn book. While SDL transfers activities to low-cost production centers in Thailand, Poland, and China, and adds software to every major deal, Lionbridge sings the “India” variation of that tune and has 130 salespeople repeating the Logoport mantra.

2006 will see a battle royale between SDL’s global information management (GIM) offer and Lionbridge’s Localization 2.0 platform (also referred to as Localization as a Managed Service). Meanwhile, the market warily watches both offers. Large buyers who saw Trados as a vendor-independent platform are skeptical of working with SDL, but are not sure if Lionbridge’s managed services offer is not just another wolf in sheep’s clothing. As in any transition, changes like this open doors for alternatives from suppliers like Idiom, MultiCorpora, DocZone, and Opticentre, each of which hopes to inherit Trados’ former role as the Switzerland of language technology.

We believe that both Lionbridge and SDL have done most of the house-cleaning in their financial statements. That means good numbers throughout the year are likely unless, of course, their execution falters, economic conditions change for the worse, or the locusts descend. Barring such problems, history tells us that positive news from these publicly traded bellwethers usually spells good prospects for all players in the translation and localization space.