Riverdeep is listed in Dublin and on the Nasdaq Composite Index. Last August it announced annual losses of $35.2 million after spending around $35 million on acquisitions. It bought ED-Vantage Software, an educational software development company in Sonoma, for $24.3 million and acquired the entire assets of the IBM subsidiary, Edmark Corporation, which has a customer base in 46,000 schols, following which IBM took a 14 per cent stake in the company.

With the earlier acquisition of the educational software assets of Logal Educational Software and Systems, it gained Internet delivery capability and an Internet portal site, alleviating the concerns of some industry observers that the company's focus on the development of CD-ROM based software would let it fall behind competitors harnessing the Internet for product delivery. The value of the company's average deal with schools rose from $1,500 per school 18 months ago to more than $200,000 in the last quarter of 2000.

With 40 per cent of its market federally funded, Riverdeep has not been as vulnerable to the economic slowdown as other Nasdaq neophytes, and has consistently outperformed expectations, though it has reduced its workforce from 400 to 350.

Chief executive Barry O'Callaghan said in February that the company would achieve sales of about $100 million this year and $200 million next year and would reduce costs by 20 per cent in 2001, resulting in some redundancies in the US and cutting the timeframe to profitability from mid-2002 to the fourth quarter.

After its listing on the Nasdaq, Riverdeep stock trebled in value by 235 per cent from an opening market capitalisation of $536 million to a closing market value of$ 1.8 billion, and share price surged to $66.9.

With a 53 per cent shareholding valued at $951 million, and many millions in other assets, this briefly made McDonagh, who is married with three children and lists his interests as golf, breeding pedigree cattle and the GAA, a dollar billionaire. But that was at the height of the Nasdaq madness. The market subsequently judged the company to be hugely overvalued and shares fell to $16. They presently trade at around $26.