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By Brenon Daly, DBC News
DBC's NewsWatch
DBC's StockWatch
Market Monitor
Updated: Wed Jul 2 17:50:10
1997
Red Brick sees turnaround; analysts uncertain
BURLINGAME, Calif. (DBC) -- Red Brick Systems, its shares having lost half their value after a
hapless sales report in April, is "fairly far along" in rebuilding its salesforce and regaining
momentum, CEO Chris Erickson says.
Analysts aren't so sure. Some of them caution it's still too early to tell if the restructuring will pan
out at the company, which makes relational database software for data warehousing. In
mid-April, the stock plunged after the company reported revenue of $6.5 million -- half the level
analysts were expecting. Sales at the company had quadrupled from 1994 to 1996. Red Brick
shares dipped 1/16 to 6 15/16 Wednesday.
Erickson, who appeared at the Technologic Partners software conference this week in
Burlingame, Calif., said he recognized last autumn that booming growth had stretched the young
company very thin. "We thought we could slide by for one more quarter, which was our largest
ever; we couldn't," he said.
"The changes that we planned in September of last year are fairly far along," Erickson added.
"That's not to say it's prudent to snap back to our historic growth rates. I don't think that would
be the ideal thing to do because the market isn't going to reward us for a single great quarter. The
market has already punished us pretty badly, but you need to show continuous improvement and
put value back in the stock," Erickson said.
Analysts are uncertain about when that value will return. Five of the seven analysts surveyed by
Zacks Investment Research rate Red Brick a "hold."
"We're still in a sort of wait-and-see mode," said Hambrecht & Quist analyst James Pickrel.
"Right now, it's just a matter of execution. The company has taken some pretty strong steps since
the miss, but it was a pretty big miss."
The sales difficulties were made worse by stepped up pressure from competitor Oracle. The
world's largest database software company rolled in some of the data warehousing features into
its new flagship product, Oracle8.
"We can't make the noise that Oracle can make," Erickson said. "But we can find the people who
need our product. And once we find them, our win rate is extraordinary. Oracle's strategy is keep
us out of the account."
Although Pickrel praised Red Brick's technology, he said the Oracle's weight in the industry
"makes it difficult for Red Book to get companies to sit down and make comparisons."
Still, Erickson projected the market would grow to $1 billion by 2000. "There's plenty of room
for us to be a $300 million company and not put anybody out of business to do that," he said.
Red Brick had sales of $36 million last year.
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Brenon Daly is a DBC News reporter. You want to tell DBC News something? E-mail
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