Key financial performances in August 2005

That has created some pretty lumpy financial performances. Having reported a weak first quarter – and been forced to lay off 12% of its workforce as a result – business service management software vendor BMC bounced back in its latest period to 30 June with a 7% rise in revenues to $348.3 million and net income that jumped 39% to $43.9 million compared to the same period last year.

The revival will only be partially sustained in coming months, with the company predicting an anaemic 2% increase in its coming second quarter. That may explain the resignation of BMC‘s chief finance officer George Harrington immediately after the results announcement.

Investment firm Bear Stearns is certainly not upbeat, highlighting slowness in BMC’s two main revenue streams. “While we view the results favourably, we are not convinced at this time that BMC can stabilise its core mainframe database tools business (though it was admittedly strong in the June period) or meaningfully grow its distributed [systems management] business,’ say its analysts in a research report.

Elsewhere in the systems management domain, Computer Associates (CA) reported a similar performance during its first quarter of 2006 – but this time security was the positive influence. Overall, revenues grew by 8% to $920 million, quarter-on-quarter, driven by increased subscription revenue growth, and strong demand for the company’s CA’s security offerings.

Again, though, there was a fly in the ointment. Compared with the same period last year customer bookings dropped in value by 30% to $415 million – a fact that will undoubtedly harm revenues in the coming quarters. CA attributed this fall in new business to a change it made in the way sales representatives are compensated.

In order to pre-empt this looming revenue slump, CA has instigated a restructuring plan of its own. With a 5% reduction of its workforce, CA intends to reduce its operational costs by $70 million annually.

A strong quarter with a more positive outlook was enjoyed by application performance management software vendors Mercury Interactive and Quest Software. Revenues for Mercury jumped 30% to $207.1 million in its second quarter of 2005 – a pace that the company expects to only slow by one or two percentage points during the coming year.

That strong performance was slightly tarnished by the revelations of an internal audit at the company. Investigators found that Mercury had incorrectly reported the value of stock option grants in its quarterly and annual reports. It will now restate all of its main financial statements from 2002 to the first quarter of 2005.

As a result, it has been warned it may be temporarily de-listed from Nasdaq, and it now faces a number of class-action suits from shareholders.

Quest’s revenues, at $107.1 million, gave the specialist in application, database and infrastructure management software a 16% quarter-on-quarter growth rate. However, the primary growth engine was services. While software licence sales were only up 7%, the equally large revenues generated by services rose 28%. The consensus among Wall Street analysts who track the company is that it will end the year with revenues of $460 million, up 8%.

A less successful picture was evident at NetIQ, the integrated systems and security management solutions vendor reported fourth quarter revenues down by 12% to $50.1 million. Of more concern to the company’s management – and to customers – was the fact that new license revenue plummeted 27%. Perhaps management was distracted by the company’s M&A activity. During the quarter, NetIQ sold web analytics software provider Web Trends, making its net profit for the period look hefty at $48.7 million.

To try to combat the downturn, CEO Chuck Boesenberg says NetIQ has narrowed its product focus to the top five strategic product areas, and aligned its corporate structure around those. Nonetheless, bookings for those five strategic products were down by 20% in the quarter.

Good reports

Positive growth was shared more universally in the business intelligence (BI) sector. Firstly, Business Objects announced that revenues in its second quarter grew by 18% to $262.4 million. Double digit revenue growth was experienced in all of the company’s major regions, despite unfavourable currency conversion rates.

Rival MicroStrategy showed equally impressive growth during the same period. Revenues jumped 31% to $65.4 million with licence revenue up 24%.

Slightly less buoyant, but still enjoying the solid demand for BI, SPSS, which makes predictive analytics tools, produced a 10% increase in revenues to $58.1 million in its second quarter of 2005 and new license revenues grew by 17% to $21 million. The success resulted in SPSS’s highest operating margin for the last five years.

Those numbers are in line with some of the other results in the business intelligence sector in recent months, with Cognos reporting revenue growth of 15% and Hyperion Solutions turning in revenue growth of 7%.


Key supplier financial results – August 2005
Company   Main activity   Period   Period end   Revenue ($m)   Rev change   Net inc ($m)   Prev net Inc ($M)  
Altiris Inc IT management s/w 2Q05 30-Jun 46.3 16% 4.0 3.7
Atos Origin SA* IT services 2Q05 30-Jun 1779.7 4% n/a n/a
Avaya Inc Networking products 3Q05 30-Jun 1236.0 22% 194.0 61.0
BEA Systems Inc Integration &process mgmt s/w 2Q05 31-Jul 285.2 9% 36.1 30.6
BMC Software Inc Data &systems mgmt s/w 1Q06 30-Jun 348.3 7% -41.1 10.7
Borland Software Corp Application development s/w 2Q05 30-Jun 66.6 -13% -17.5 2.8
Business Objects SA Business intelligence s/w 2Q05 30-Jun 262.4 18% 23.1 11.5
CGI Group Inc* IT services 3Q05 30-Jun 770.5 11% 46.8 42.9
Check Point Software Tech Ltd Security s/w 2Q05 30-Jun 144.6 14% 78.0 63.3
Ciber Inc Systems integration svcs 2Q05 30-Jun 241.0 16% 6.6 7.9
Cisco Systems Inc Networking products 4Q05 30-Jul 6581.0 11% 1540.0 1380.0
Citrix Systems Inc Server applns access s/w 2Q05 30-Jun 211.2 18% 27.9 31.5
Cognizant Tech Solutions Corp Offshore IT services 2Q05 30-Jun 211.7 53% 36.0 23.8
Cognos Inc Business intelligence s/w 1Q06 31-May 200.1 15% 23.8 20.1
Computer Associates Intl Inc Systems mgmt &security s/w 1Q06 30-Jun 920.0 8% 94.0 40.0
Computer Sciences Corp IT services 1Q06 01-Jul 3582.5 9% 131.6 110.4
Dell Inc PCs &servers 2Q05 29-Jul 13428.0 15% 1020.0 799.0
E.piphany Inc Customer interaction s/w 2Q05 30-Jun 16.7 -18% -8.3 -3.6
Electronic Data Systems Corp IT services 2Q05 30-Jun 5199.0 -1% 26.0 270.0
Hewlett-Packard Co Systems, s/w &IT services 3Q05 31-Jul 20759.0 10% 73.0 586.0
Hummingbird Ltd Data analysis/cont mgmt s/w 3Q05 30-Jun 61.7 10% -1.9 2.4
ILOG SA S/w components 4Q05 30-Jun 32.6 24% 1.5 0.2
Intentia AB* Business application s/w 2Q05 30-Jun 115.7 4% 6.7 0.9
Internet Security Systems Inc Security s/w 2Q05 30-Jun 79.1 14% 8.3 5.5
Macromedia Inc Interactive s/w dev tools 1Q06 30-Jun 116.8 13% 15.2 13.0
McAfee Inc Security s/w 2Q05 30-Jun 245.4 9% 41.7 10.2
Mercury Interactive Corp Appln perf mgmt s/w 2Q05 30-Jun 207.1 30% 18.6 11.6
Micromuse Inc Network management s/w 3Q05 30-Jun 39.3 13% -12.6 -2.5
MicroStrategy Inc Business intelligence s/w 2Q05 30-Jun 65.4 31% 17.6 11.4
NCR Corp Data ware/financial systems 2Q05 30-Jun 1470.0 1% 127.0 122.0
NetIQ Corp Systems management s/w 4Q05 30-Jun 50.1 -12% 48.7 -6.9
Network Appliance Corp Storage servers 1Q06 29-Jul 448.4 25% 60.1 46.9
Novell Inc Networking, open source s/w 3Q05 31-Jul 290.2 -5% 2.1 23.4
Perot Systems Corp IT services 2Q05 30-Jun 488.2 13% 32.6 21.9
QAD Inc Manufacturing s/w 2Q06 31-Jul 58.0 2% 3.8 2.0
Quantum Corp Storage systems 1Q06 27-Jun 206.6 20% -5.5 -10.2
Quest Software Inc Application management s/w 2Q05 30-Jun 107.1 16% 10.7 2.6
Rightnow Technologies Inc CRM software 2Q05 30-Jun 21.1 43% 1.6 0.6 inc Online CRM applns 2Q05 31-Jul 71.9 77% 5.0 1.2
Sapient Corp Consulting &tech services 2Q05 30-Jun 78.8 16% 2.7 5.7
Siebel Systems Inc Customer relation mgmt s/w 2Q05 30-Jun 313.6 4% -50.0 7.5
Software AG* Database and XML mgmt s/w 2Q05 30-Jun 143.7 4% 20.8 20.0
SPSS Inc Business intelligence s/w 2Q05 30-Jun 58.1 10% 3.7 -1.0
Stellent Inc Content management s/w 1Q06 30-Jun 28.6 26% 1.1 -3.8
Storage Technology Corp Storage systems 2Q05 01-Jul 549.3 6% 31.2 35.6
Sun Microsystems Inc Workstations, servers, web s/w 4Q05 30-Jun 2975.0 -4% 121.0 783.0
Symantec Corp Security s/w 1Q06 30-Jun 699.9 26% 198.6 117.3
Unit 4 Agresso NV* Business applications s/w 1H05 30-Jun 214.5 42% 9.9 7.0
WebEx Communications Inc Web conferencing svcs 2Q05 30-Jun 75.3 23% 13.9 10.3
WebMethods Inc Appln/process integration s/w 1Q06 30-Jun 47.7 14% -0.5 -10.8
* Figures converted into US$ at exchange rates averaged over the period.

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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...

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