The first signs of Spring?

Market-watchers were quick to seize on improved fourth quarter results from business applications vendors as evidence of a recovery in the industry. However, weak licence sales and a continued commitment to cost cutting suggest that economic conditions could still prove challenging for technology companies.

Europe’s largest software developer, SAP, was particularly bullish about the year ahead, forecasting sales growth of 15%. The enterprise resource planning vendor said that the bulk of the growth is expected in the second half of 2002, buoyed by an expected surge in license sales.

This upbeat announcement followed a healthy set of fourth quarter results marred only by a 2% fall in licence sales to just over €1 billion. Total revenues rose 7% to €2.3 billion compared to the same period in 2000. However, costs related to the acquisition of Top Tier and the impact of SAP’s 20% stake in loss-making US e-marketplace specialist Commerce One pushed net profits down 13% to €319 million. (For an analysis of the changing nature of the relationship between SAP and Commerce One, see Together forever?).

These costs, which totalled €200 million for the 12 months to December 2001, also eroded full-year figures. Net profits slipped 13% to €509 million despite a 17% boost in sales to €7.3 billion. Licence sales of SAP’s customer relationship management and supply chain management software, two of the main areas SAP is focusing on, performed particularly well.

Sweden’s enterprise resource planning vendor, Intentia, enjoyed a continued upturn in its fortunes. Sales climbed 31% to SEK1.3 billion (€141.5m) in the three months to December 2001. Licence sales were up 28% to SEK443.1 million (€48.2m), although licence orders during the period slipped 7% to SEK497.6 million (€54.2m).

Intentia surged SEK87.1 million (€9.5m) into the black, from net losses of SEK22.9 million (€2.5m) in the same period of 2000. For the year as a whole, the group met its target of posting an operating profit, and slashed net losses by 74% to SEK56.5 million (€6.2m). Sales jumped 24% to SEK4.0 billion (€440.0m).

In contrast, steep falls in quarterly revenues and profits at top-tier systems vendors revealed the extent of the decline in US corporate IT spending. Sales fell across almost all of IBM‘s divisions in the fourth quarter, pushing group revenues down 11% to $22.8 billion (€26.2bn). The systems giant attributed much of this decline to weak PC and server sales. Surprisingly, even revenues at IBM Global Services dipped 1% to $9.1 billion (€10.5bn).

Sun Microsystems reported even bleaker second quarter results to the end of December 2001. The systems vendor plunged $431 million (€301.8m) into the red from profits of $423 million (€296.2m) during the same period in 2000, a fall attributed to $511 million (€357.8m) in restructuring costs and a staggering 39% slump in revenues. Sun has been particularly affected by the demise of dot-com customers who still accounted for a large chunk of Sun’s sales in the closing quarter of 2000. Recognising this, Sun’s CEO Scott McNealy outlined plans to target more stable industry sectors such as healthcare, education and government.

Unisys, the server and services group, delivered the most optimistic interpretation of results. CEO Larry Weinbach talked of “signs of stabilisation in our US business”, where revenues slipped 7% for the three months to the end of December 2001. Total group revenues were down more than a third to $1.6 billion (€1.1bn), due to weakness in its international division, and in Japan and Latin America in particular. Falling margins and a $276.3 million (€193.5m) restructuring charge plunged Unisys $169.4 million (€118.6m) into the red from profits of $39.1 million in the same period in 2000. Its performance over the full year was only slightly less alarming: revenues were down by 13% to $6.9 billion, and losses hit $67.1 million compared to profits of $225.0 million in 2000.


European results reported in January/Februaryy 2002 (all figures in € millions)
Company   Activity   Country   Period   Period End   Revenue   Change   Net inc   Prev n.i.  
ActivCard SA Security s/w France 4Q01 31-Dec 7.6 11% -11.0 -20.0
Aladdin Knowledge Systs Ltd Systems security products Israel 4Q01 31-Dec 14.6 11% 0.1 0.2
ARM Holdings Plc Chip designer UK 4Q01 31-Dec 65.6 35% 15.0 14.3
Business Objects SA Business intelligence s/w France 4Q01 31-Dec 130.8 10% 15.8 17.9
Check Point S/w Tech Ltd Internet security s/w Israel 4Q01 31-Dec 137.2 -13% 86.4 90.7
Dassault Systemes SA Engineering s/w France 4Q01 31-Dec 225.3 15% 42.1 36.5
Electronic Data Processing Plc ERP s/w UK 2001 30-Sep 17.0 25% -0.5 1.3
ILOG SA S/w components France 2Q02 31-Dec 23.1 1% 0.2 0
InfoVista SA Network performance s/w France 2Q02 31-Dec 7.7 9% -1.4 -2.2
Intentia AB Business application s/w Sweden 4Q02 31-Dec 140.5 31% 9.6 -2.5
Iona Technologies Plc Object middleware s/w Ireland 4Q02 31-Dec 50.9 -5% -28.1 6.4
Ixos Software AG SAP R/3 imaging s/w Germany 2Q02 31-Dec 33.0 -2% 4.5 0.1
London Bridge S/w Hldgs Plc Management s/w UK 2001 31-Dec 120.8 31% 4.9 5.0
Mercury Interactive Corp Program testing s/w Israel 4Q01 31-Dec 101.1 -7% 17.7 28.9
Micromuse Inc Systems management s/w UK 1Q02 31-Dec 44.9 -20% 0.7 6.1
Misys Plc Financial sector s/w UK 1H02 30-Nov 782.7 16% 0.5 44.5
Orchestream Holdings Plc Network mgmt s/w UK 3Q01 30-Sep 5.2 191% n/a n/a
Pace Micro Technology Plc Electronic device maker UK 1H02 01-Dec 566.4 5% 36.3 28.2
SAP AG Business appln s/w Germany 4Q01 31-Dec 2,315.0 7% 319.0 367.0
Software AG Database &dvlpmnt s/w Germany 4Q01 31-Dec 159.6 36% 16.3 23.0
Tadpole Technology Plc Notebook PCs UK 2001 30-Sep 40.1 46% -12.7 -2.4
Triad Group Plc Info sys &s/w consultancy UK 1H02 30-Sep 39.4 -3% 1.7 1.4
Vocalis Group Plc Speech/telephony s/w UK 1H02 30-Sep 2.0 -39% -3.2 -4.0
All currencies converted to euros at current exchange rates.


Global results reported in January/February 2002 (all figures in $US millions)
Company   Activity   Country   Period   Period End   Revenue   Change   Net inc   Prev n.i.  
Advanced Micro Devices Inc Microprocessors US 4Q01 30-Dec 951.9 -19% -15.8 178.0
Ariba Inc E-marketplace s/w US 1Q02 31-Dec 55.3 -68% -161.3 -347.6
Brio Software Inc Data analysis s/w US 3Q02 31-Dec 28.2 -27% -5.0 -0.3
Citrix Systems Inc Server applns s/w US 4Q01 31-Dec 158.0 28% 25.6 19.4
Commerce One Inc E-marketplace s/w US 4Q01 31-Dec 56.0 -71% -168.3 197.5
Compaq Computer Corp PCs, systems &IT services US 4Q01 31-Dec 8,456.0 -26% 92.0 -672.0
Computer Associates Int’l Inc Systems &applns s/w US 3Q02 31-Dec 749.0 -4% -231.0 -342.0
Compuware Corp Prog tools &sys mgmt US 3Q02 31-Dec 450.6 -9% 29.8 36.0
FreeMarkets Inc E-sourcing s/w &services US 4Q01 31-Dec 44.8 41% -2.8 -44.6
Hyperion Solutions Corp Analytic applns &OLAP s/w US 2Q02 31-Dec 116.6 -13% 3.7 2.3
IBM Corp Systems &IT services US 4Q01 31-Dec 22,826.0 -11% 2,333.0 2,670.0
Internet Security Systems Inc Internet security s/w US 4Q01 31-Dec 58.0 -3% -10.3 6.3
Kana Inc Customer management s/w US 4Q01 31-Dec 24.8 -38% -24.2 -2,435.2
Microsoft Corp PC applns/systems s/w US 2Q02 31-Dec 7,741.0 18% 2,283.0 2,624.0
NCR Corp Data warehousing/fin systs US 4Q01 31-Dec 1,600.0 -11% 71.0 90.0
Network Associates Inc Computer security s/w US 4Q01 31-Dec 259.2 341% -3.5 -147.2
Siebel Systems Inc Customer relationship s/w US 4Q01 31-Dec 481.4 -17% 65.9 79.5
Storage Technology Corp Storage systems US 4Q01 28-Dec 566.4 -6% 40.0 30.8
Sun Microsystems Inc W/stations, servers, web s/w US 2Q02 30-Dec 3,108.0 -39% -431.0 423.0
Symantec Corp Security &appln dev s/w US 3Q02 28-Dec 290.2 32% 0.1 13.9
Unisys Corp Systems &services US 4Q01 31-Dec 1,556.9 -19% -169.4 39.1
Vignette Corp Web customer s/w US 4Q01 31-Dec 52.5 -58% -966.6 -138.7
WebMethods Inc Application integration s/w US 3Q02 31-Dec 49.1 -17% -13.9 -12.7
All currencies converted to US dollars at current exchange rates.

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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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