Shane-
Here are my notes from the cc:
Poor quarter blamed on 3 factors:
1.Shift of several large projects to close this quarter (later in the call, I understood LB to say that some of these still have not closed and may or may not be wins in the end; obviously a bit more to it than "these big orders just missed the tail end of the quarter").
2.Personnel changes in sales force
3.Mgt attention to ecommerce and loss of focus on core biz.
Added 63 customers to iProcure (94 total now).
(I take it that eMRO is now re-Christened iProcure; much more broad appeal for this name; what's an MRO to non-maintenance folks?). iProcure revenues $94,000 for quarter. Still tiny, DSTM investing in this area.
Bizsurplus.com is going well, but sounds like peanuts still(users went from 200 to 400, revenues $20,000 for quarter).
Added Ferguson Enterprises (pipe) to their short list of iProcure suppliers.
Much attention given (appropriately, IMO) to recent Lear contract. DSTM dangled carrot of potential for $300MM of total non-production-use purchases by Lear. Unfortunately, this includes their office etc and may be quite unrealistic any time soon. But Lear has bumped iProcure to the next level. They are negotiating with 14 new suppliers, basically all of Lear's biggest suppliers, to get them to join the iProcure network and to get their stuff cataloged in DSTM's system.
Lear pilot phase to be complete by end of 1999, phase 1 by 1H00 (50 plants), phase 2 by 2H00 (50 more plants, I think?). Lear was a big DSTM user already and they think this win will help convince additional customers to go with iProcure, and also convince other suppliers to join. This makes sense to me; they are gunning hard to get critical mass.
iProcure is focused on industrial market, whereas other b-to-b ecommerce startups are focusing on the front office ("pencils and paperclips", with a bit of a sneer). Industrial market is much more complicated, less centralized, and harder to crack into. DSTM is already there with 50,000 customers and plans to add iProcure to the menu of all products by 4Q99 (not absolutely sure of that date, and "all" products; my notes are rough here).
Lear-sized potential customers include a big specialty chemicals company and several others. I am assuming these are mostly existing customers with big DSTM installations.
Recent wins are a wild assortment of "industries": Dell computer, Case Western Reserve Univ., Pilla Windows, several big oil cos., etc. I like this diversity of customer base.
It is clear to me that DSTM has broadened its plans for iProcure, to potentially cover far more than MRO parts. I like this, but am not sure whether their conservative strategy will earn victory (i.e. funding this startup-type venture out of existing DSTM cash flow while still maintaining profitability in the core biz). There are well-capitalized startup companies gunning for some of the same space. DSTM is taking the "tortoise" approach, which just may win out due to their customer base and knowledge of MRO.
International operations are problematic ("transition issues"). Sounds like converting the customers of the acquired overseas companies to MP2 & MP5 not as easy as thought. High level of non-billable services to migrate customers to DSTM platforms was cited. But, LB said they now have "Greenville people" (hey, I resemble that remark!) in all of the foreign subsidiaries, so they know what's really going on there (candor here surprised me). LB said to expect positive structural changes in int'l ops in 4Q99, with results showing up in 1Q00 and 2Q00 numbers.
Y2K: A few customers are doing "lockdowns" (not buying ANY new software until y2k passes), but this has been surprisingly minimal.
DSTM working hard on "tier 1" customers, building up pipeline. 20% top line growth expected and "comfortable" (spoken very uncomfortably!) with estimates of 80 cents for next year.
That's about it. Sorry a bit rough and slow on the posting here. I have been severely slowed down by a case of "walking pneumonia", and this morning St. Joe came out with news and surprise cc, so got sidetracked by that.
Hope all is well.
Best,
Wright |
