Applications ups and downs

Mid-market applications vendors experienced mixed fortunes in the first and second quarters of 2002. Revenues at supply chain management software companies Industri-Matematik International (IMI) and Kewill Systems plunged, while sales at business applications vendor Navision – now part of Microsoft – have been growing healthily, rising 16% from the year ago period to EU49.4 million.

Stockholm-based IMI was once a high-profile independent supply chain software vendor, but it has been losing market share since 1999, despite various restructuring efforts. This pattern continued through its 2002 financial year. In its fourth quarter, year-on-year sales fell by 32% – and the all-important product licence revenues fell more than 80% from EU4 million to EU460,000. For the year, licence revenues amounted to EU5.1 million, compared with EU15.4 million in 2001.

AMR Research analyst Mark Gomes says IMI may be "in the early stages of turning things around", having re-hired the original team of people who grew its US business from EU2.3 million to EU63.8 million in 1998. (Since 1998 sales from IMI's Americas unit have almost halved.) But for IMI to execute its turnaround properly, Gomes warns the company needs to improve its sales story.

Sales at supply chain software company Kewill Systems were also disappointing. Like many of its competitors, Kewill sees collaborative commerce as a key to future growth, and considers its Kewill.Net supply chain portal of applications and services as core to its strategy. But US orders for its collaborative commerce technology in the third quarter fell by almost a third against the immediately preceding second quarter. The company says that in its fourth quarter both its collaborative commerce and enterprise resource planning (ERP) businesses were "stronger than anticipated". Kewill sold its midrange ERP business to Dutch rival Exact Holdings for EU19.6 million in May 2002 – a sign of the consolidation that is expected to sweep through the IT business in the coming two years. This will be accounted for in the next set of figures.

The sale of Denmark's Navision to Microsoft was motivated by the latter's desire to build up a midrange applications business, rather than consolidation. The company has bought midrange CRM specialist Great Plains. Navision was doing well enough without Microsoft – sales grew by 16% in its fiscal third quarter. As part of Microsoft, its sales are likely to grow further and, say analysts, the company could go on to dominate the European mid-market and overtake rivals including Sweden's Intentia and International Business Systems. But Microsoft will consolidate the figures, so it won't be so easy to track Navision's performance.

As expected, there were some big revenue falls and heavy losses reported by some of the US leading technology companies in the second quarter. And the same quarter in 2001 was, in most cases, down on the year before.

Even so, the one figure that stands out is the 1400% revenue increase at Divine. This is, of course, entirely due to its continuing spree of acquisitions – which partly, but certainly not wholly, explains its $70.9 million losses.

Three US business intelligence tools suppliers reported first quarter figures. MicroStrategy struggled back to profitability in its fiscal first quarter, after several quarters of losses, thanks to a restructuring and a reining in of costs. But sales continue to shrink. In its fiscal first quarter, revenue fell by 28% year-on-year.

MicroStrategy is betting that better times are ahead, however. In April 2002, it launched its latest release, MicroStrategy 7i. The product, which took 18 months to develop, will take business away from the likes of SAS Institute, Cognos and Business Objects, says MicroStrategy's CEO, Michael Saylor. However, AMR's Kevin Scott is more circumspect: "It helps the company keep pace."

Most BI vendors have been struggling. One of the exceptions has been privately held SAS Institute, albeit reporting a modest growth rate of 1% in 2001. Until this year, SAS, which doesn't release profit figures, has always said it had steady, year-on-year revenue and profit growth.

Sales at data analysis company Informatica, whose roots lie in extraction, transformation and loading (ETL) tools, fell 12% in the first quarter. But SPSS, transformed from a statistics company into an analytical software vendor through restructuring and the acquisition of web analytics company NetGenesis, reported a 12% sales climb in the same quarter. But acquisitions played a part. During that period, SPSS also bought natural language processing and text-mining software company LexiQuest for $2.5million (EU2.6m). The deal seeks to strengthen SPSS's customer relationship management capabilities. It brings SPSS in closer competition with SAS Institute, which also launched text-mining software in 2002.


European results in May/June 2002 (all figures in EU millions)
Company   Activity   Country   Period   Period end   Revenue   Change   Net inc   Prev n.i.  
Aveva Group* Process/power plant s/w UK 2001 31-Mar 51.9 13% 5.5 5.7
Bookham Technology* Optical semiconductors UK 1Q02 31-Mar 9.1 -52% -27.6 -19.1
Brain International Mid-range ERP s/w Germany 1Q02 31-Mar 24.8 -13% -4.3 -3.5
Day Interactive Holding* Content management s/w Switzlnd 1Q02 31-Mar 2.2 -44% -9.7 -8.2
Eidos* Entertainment s/w UK 2002 31-Mar 213.4 -16% -23.1 -158.6
Esker Web integration s/w France 1Q02 31-Mar 7.5 0% n/a n/a
Eyretel* CRM s/w UK 2002 31-Mar 81.5 27% 1.2 -4.8
Fantastic* Data broadcasting s/w Switzlnd 1Q02 31-Mar 0.5 -75% -10.8 -25.2
Industri-Matematik Intl* Supply chain mgmt s/w Sweden 4Q02 30-Apr 14.4 -32% -3.4 -30.6
Kewill Systems* Supply/dmnd chain mgmt s/w UK 2002 31-Mar 78.5 -22% -93.9 0.6
Madge Networks* Networking systs &servs Neth 1Q02 31-Mar 11.4 -57% -0.6 2.7
Merant* Change management s/w UK 4Q02 30-Apr 34.9 -15% -31.4 -23
Meta4 Group Human resources s/w Spain 1Q02 31-Mar 10.9 -8% -2.9 -8.5
Navision* Business applns s/w Denmark 3Q02 31-Mar 49.4 16% 3.2 4.7
nCipher* Security software UK 1Q02 31-Mar 5.3 -27% -2.3 -0.7
Netlife Internet financial s/w Germany 1Q02 31-Mar 3.5 -21% -0.5 0
Northgate Info Solns* Applns s/w &IT services UK 2002 30-Apr 150.9 -14% 13.9 2.7
Poet Holdings* Catalogue management s/w Germany 1Q02 31-Mar 2.5 -21% -2.7 -4.1
SCM Microsystems* Smartcard/security systems US 1Q02 31-Mar 49.5 -4% 0.1 -20.9
Synstar* IT availability services UK 1H02 31-Mar 181.9 -7% 0.9 -31.2
Tadpole Technology* Notebook PCs UK 1H02 31-Mar 15.9 1% -4.6 -5.2
TietoEnator IT services Finland 1Q02 31-Mar 310.1 10% 20.7 36.4
Triad Group* Info sys &s/w consultancy UK 2002 31-Mar 67.8 -21% -0.6 5.1
Utimaco Safeware Security s/w Germany 3Q02 31-Mar 5.6 -37% -3.8 -2.1
Vocalis Group* Speech/telephony s/w UK 2002 31-Mar 2.8 -36% -6.2 -11.6
WM-data* IT services Sweden 1Q02 31-Mar 202.4 -49% 5.5 9.7
*Currencies converted to euros at exchange rates averaged over the financial period


Global results reported in May/June (all figures in $US millions)
Company   Activity   Country   Period   Period end   Revenue   Change   Net inc   Prev n.i.  
BEA Systems Middleware s/w US 1Q02 30-Apr 224.8 -13% 3.9 20.6
BMC Software Data &systems mgmt s/w US 4Q02 31-Mar 331.8 -22% -1.8 23
Borland Software Application development s/w US 1Q02 31-Mar 57.1 10% 4.6 5.9
Broadvision Customer targeting s/w US 1Q02 31-Mar 30.5 -67% -36.1 -105.1
Cisco Systems Networking products US 3Q02 27-Apr 4,822.00 2% 729 -2,693.00
Computer Associates Intl Systems &applns s/w US 4Q02 31-Mar 772 6% -238 -410
Computer Sciences IT services US 4Q02 29-Mar 3,046.20 5% 141.1 -37.4
Compuware Prog tools, sys mgmt US 4Q02 31-Mar 407.2 -21% -335.9 46.6
Dell Computer PCs &PC servers US 1Q02 03-May 8,066.00 0% 457 462
Divine Enterprise s/w US 1Q02 31-Mar 146.3 1400% -70.9 -65.6
FreeMarkets E-sourcing s/w &services US 1Q02 31-Mar 46 32% -11.5 -43.7
Geac Computer* Business applications s/w Canada 4Q02 30-Apr 126.4 -22% -18.6 -6.2
Hewlett-Packard Systems &IT services US 2Q02 30-Apr 10,621.00 -9% 252 47
Informatica Data mgmt/integration s/w US 1Q02 31-Mar 48.5 -12% -0.3 -1.9
JD Edwards Business applications s/w US 2Q02 30-Apr 223.6 1% 3.5 -7.5
Legato Systems Storage management s/w US 1Q02 31-Mar 55.6 -9% -46.7 -10.6
Macromedia Interactive s/w dev tools US 4Q02 31-Mar 75.6 -15% -80.5 -21.8
Mercator Software Application integration s/w US 1Q02 31-Mar 27.4 -5% -6.1 -20.7
Microstrategy Business intelligence s/w US 1Q02 31-Mar 35.7 -28% 3.0 -20.6
Network Appliance Storage servers US 4Q02 30-Apr 204.9 -9% 7.8 0.5
Novell Networking s/w US 2Q02 30-Apr 273.9 14% -173.5 -151.3
Quest Software Application mgmnt s/w US 1Q02 31-Mar 59.4 -6% 1.7 -14.8
Sapient Process/perfmnc apps s/w US 1Q02 31-Mar 52.7 -54% -54.0 -48.3
SAS Institute Business intelligence s/w US 2001 31-Dec 1,130.00 1% n/a n/a
SPSS Data analysis s/w US 1Q02 31-Mar 49.4 12% -2.5 -10.5
Vitria Technology Application integration s/w US 1Q02 31-Mar 24.6 -30% -27.2 -8.5
* Currencies converted to $US at exchange rates averaged over the financial period

Avatar photo

Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

Related Topics