Merril Lynch report on MGIC:
by: razf2000 12/13/1999 4:49 pm EST
Msg: 2622 of 2646
In the M.L. report on FORTY, they write
"That Old Black Magic"
The Product Magic has developed a computor language which is a development tool for programmers. This tool enables developers to deploy e-commerce and dartabase mgration applications at a fraction of the cost and time of alternatives such as Visual Basic and Power Builder.
Magic works on a multiplatform environement. Imagine that a UNIX user needs an application that was written for an IBM AS400. Until Magic was devised, the UNIX user would have to wait until someone developed that same application for a UNIX operating system. Magic's strength is that it enables that application to be run with the same functionality on any platform. (As an aside from BB not ML, this is called 'backboning' and MGIC can do it with almost every operating system in the world).
ML continues, "It is more than just sharing the applications among different users however. Think of a multinational co. that has offices around the globe. This co. wants to offer bussiness-to-business e-commerece, but each of its branches opeerates on a different platform- a common problem for many medium-to-large companies. Magic is probably the only tool that can run the sasme e-commerce aplication on the various platforms of this co. without the need to purchase any hardware.
These ssame features make Magic appropriate for the new Linux operating system, whereby Magic's Linux software engine makes any application available for immediate use by Linux users.
From a programmer's perspective, Magic requires just 10-20% of the programming time required by other languages such as Visual Basic witha corresponding lower cost. A typical e-commerce project cost about USD 1mn using traditional tools or just USD150-200,000 with Magic
Services Spur a Turnaound
About a year ago, Magic shifted its focus from products to services, i.e., instead of selling, say, Excel software, the co. aimed to sell applications that can be built with Excel. The outcome of this new path is evident in 3Q 1999 results: revenues up 76%, EPS up 2,000 %.
Whereas previously Magic's product distributors paid royalties for the software and enjoyed most of the mark-up for the applications developed with the tool, today Magic is acquiring those distributors with good marketing channels or those that have developed important applications so that Magic itself can reap the benefits of its products. With 12 sites dotted around the globe, Magic aims to buy 7-10 other business solutions. The latest is the merger, with the Canadian Open Sesame Systems (OSS)with Magic,s North American operations.
Outlook
Magic reported 3Q sales of a record USD 16.4mn versus USD9.34 in 3Q 1998. But the real interest is in the compostion of revenues rather than top-line growth. Reflecting the new strategy, software license sales have decreased from 94% of total revenues in 2Q 1999 to 59% in 3Q 1999, which incorporated sales of eMerchant, the co's new bisiness-to-business e-commerce solution.
With major new contracts in the Netherlands, Australia, Itsaly, Germany, and France, Magic shouls see 70% top-line growth from USD60mn in 1999 to USD100MN in 2000. Net income is forecast to grow from USD 10mn to USD 17mn in the same period excluding any sasles of the Linux tool."
End of Merrill Lych commenting on MGIC as part of the Formula Systenms report.
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