In June 2004, as part of its drawn out legal battle to buy PeopleSoft, Oracle revealed a shortlist of other acquisitions it has considered. Predictably Siebel and BEA were on the list, but there was one surprising entry business intelligence software vendor Business Objects – something that says a lot about how Oracle perceives its own recent performance in that sector.
No one is saying if merger talks have taken place, but the reason for Oracle’s interest is clear.
Business Objects’ financial results for the second quarter results ending 30 June were spectacular – at least on the surface. Revenues of $222.2 million were up a stunning 72% rise and net income stood at a solid $11.5 million. However, even the company admits the numbers for the current period (which include revenues from Crystal Decisions, the BI rival it bought for $1.3 billion in December 2003) are not comparable with those of a year ago (which do not include Crystal numbers).
The real guidance on how the company is doing came during a conference call with analysts when executives said that sales in Europe bounced 28% (on a like-with-like basis) $100.9 million. That was helped by deals signed with Royal &Sun Alliance, Fedex European Services and Telia Sonera.
There were also signs that Business Objects was struggling to keep costs under control following the acquisition: profits in this year’s second quarter were actually no higher than those of a year ago, despite the addition of a $80 million-a-quarter revenue stream.
Business Objects third quarter revenues are expected to be in the range of $215.0 million to $220.0 million.
While the BI vendor has had some structural issues to contend with, it has also been told some of its products have misuse technology developed and trademarked by one of its rivals – MicroStrategy. At a US court hearing in August, Business Objects was found guilty of misappropriating confidential MicroStrategy documents and told to desist from further “unethical” and “improper” behaviour. The court heard that Business Objects acquired access to significant amounts of MicroStrategy’s proprietary and confidential information, including internal email, descriptions of software architecture and sales documents.
Despite Business Objects prying into its affairs, MicroStrategy continued its revival by reporting another solid quarter. Second quarter revenues ending 30 June 2004 were $49.9 million, a rise of 14% from $43.6 million in the same period last year.
However, sales of software licences looked slightly tarnished, down 7% to $18.3 million from the second quarter 2003, although the company attributable the slippage to an unusually high $4.0 million transaction with the US Postal Service last year.
Noteworthy customer deals for the company, whose products are particularly apt for dealing with very large data sets, include Manchester Airport, which choose MicroStrategy’s business intelligence platform to analyse and report on airline performance against specific targets for different sectors, routes and even individual flights.
At a more specialist level of business intelligence, Hyperion Solutions, which focuses on tools and applications for corporate performance management recorded strong fourth quarter revenues to the end June of $176.4 million, up an impressive a 28% growth. Net profits were $14.7 million compared to $9.2 million in the corresponding period a year ago.
Customer deals during the quarter included BT, Telenor and Yorkshire Water Services. Hyperion also released a new version of its on-line analytical programming (OLAP) product, Essbase 7.1, claimed to be the biggest advancement in its analytical technology since the introduction of its first OLAP product back in 1994.
Further good news for Hyperion came in July when IDC released research showing that the company was the market leader in 2003 for financial and business performance management analytic applications. Hyperion commanded 20.4% of the worldwide market, three times the share of any rival.
Hyperion also announced its CEO, Jeff Rodek, was handing over the top job to his chief operating officer and president of the company, Godfrey Sullivan.
The health of the BI market was also reflected elsewhere. Sales were also up at Information Builders, the privately held vendor of Focus BI tools and iWay middleware. Product revenue for the company’s second quarter increased 15%. The company says it signed more than a dozen $1 million-plus deals I the quarter and signed 50 new-name accounts worldwide. Total revenue for the quarter grew by 7%.
CEO Gerry Cohen attributed the growth to strong market spending on BI tools especially for tools that make it easier from enterprises to deploy analysis over the Internet, intranets, and extranets.
Cohen also credited wholly owned subsidiary iWay Software as a significant contributor to the company’s growth, surpassing its previous second quarter revenue by an impressive 38%.
In the BI platforms segment, NCR‘s data warehouse division, Teradata, again turned in a solid performance. Revenues rose 10% to $331.0 million (including a 3% gain from currency fluctuations), while operating income for the quarter doubled to $60 million, giving at 18% operating profit margin.