MapInfo Finds Its Way Back Onto Profitable Ground
BY J. BONASIA
INVESTOR'S BUSINESS DAILY
Maps are a business treasure. Whether detailing ancient trade routes to exotic lands, or just helping today's truck drivers on their daily rounds, maps have long helped buyers and sellers do business.
MapInfo Corp. (MAPS) of Troy, N.Y., has taken maps into the digital age. The company sells what it calls location-based software — not maps, per se — that help customers develop new products and services.
For instance, MasterCard worked with MapInfo to create what it called the first ATM locator. The credit card firm's customers can use their mobile phones or computers to find the nearest ATM machine.
Likewise, Greater New York Insurance uses the software to find out how far offices and houses are from potential terrorist targets such as airports and landmarks. This way, the insurer can better calculate risks.
Founded in 1986, MapInfo went public in 1994. Business software makers Cognos Inc., (COGN) Manugistics Group Inc. (MANU) and Siebel Systems Inc. (SEBL) resell MapInfo's products to their customers.
After two years of losses during the tech wreck, MapInfo returned to the black in the June and September quarters, and it's expected to have stayed there in its fiscal first quarter ended Dec. 31. Its sales rose 15% in fiscal 2003 to $106 million. Chief Executive Mark Cattini recently spoke with IBD about digital mapping.
IBD: How does your software actually work?
Cattini: We're able to physically relate objects, people, customers, restaurants or service centers. We can create relationships based on the earth's surface and where those people or objects are.
We might reveal the demographic clusters for a restaurant. Or we can help police know what crimes correlate with patrol routes at certain times of day. For instance, around 5 p.m. near a certain subway station.
IBD: How do you compile those trends and patterns?
Cattini: In short, we provide insights to information as a form of intelligence based around location. We can profile a demographic cluster in a certain ZIP code based on census data, other surveys and media information. We put that information into a data set that is then integrated into our software.
IBD: How does the software and data combine with other services to bring more value to corporate customers?
Cattini: The underpinning is our software that runs on the desktop, the Web or the wireless Web to provide our core location intelligence. There are a whole series of data sets that we provide to give geographical context from a customer viewpoint.
It could be digital street data, or property boundary data, or insurance-specific data about earthquakes or accident areas. So we combine those demographics and information and integrate that with the customer problem.
IBD: Can you give an example?
Cattini: Say the New York Police Department has certain crime data. Through a process of geo-coding, we can make the (data) location-relevant and provide a geographical backdrop in the form of a query of those locations. So the NYPD can look at those questions to actually locate the concentrations of crime.
In other words, we can integrate the street data with the crime data to find where the crimes are occurring. The crime data in the database have no location intelligence, other than where a crime was committed. So we extract that value to allow better decision-making about where and when crimes occur. We do crime pattern analysis so our clients can do more effective policing.
IBD: Which industries need this technology?
Cattini: Our natural markets have always been telecom and the public sector. Telco is about space relationships and geographic situations. You have to know where the pipes and customers and competition are so you can build or buy (lines) to service your customers more effectively.
Of course, there was a rapid ramp up with the telecom market, and then a collapse. That's why we de-risked ourselves by focusing on a wider (market) footprint.
In the public sector, it's more about tax boundaries and brackets, land management and self-help online.
Another example involves environmental issues. We might look at mortality rates for the Centers for Disease Control, based on certain diseases in certain areas. The goal is to find the location relationships that affect illnesses.
IBD: Which sectors are ripe for growth?
Cattini: In retail, restaurants and real estate, our value is around market analysis and site selection. Last year we acquired Thomson Associates, which has 30 years of experience in retail and restaurant modeling.
We think we can also take our business into insurance, the next key area that's a massively under-penetrated market for this technology. The reason for that is the insurance industry is slow to migrate to newer technologies.
One thing we're able to do is assess their concentration of risk. For example, we can help determine an insurer's exposure to risk in an earthquake zone or a hurricane alley.
Another big area involves the threat of terrorism. Insurers are tremendously vulnerable if they don't understand that terrorist risk.
IBD: MapInfo's main goals last year were cutting costs and growing sales. What are your priorities this year?
Cattini: Our goal is to be profitable every quarter and expand our margins. We made adjustments in Q2 of last year, due to the telecom fallout and the downturn in (tech) spending. We made a head count adjustment of about 50 people.
At our peak we were at 780 staff. Now we're around 700, but we added 93 people with the Thomson acquisition. So we took about 170 people out of our base business in incremental steps and managed our way through the downturn. We didn't chop 200 heads at once.
The next goal was returning to profit in fiscal Q3 and expanding that margin in Q4, which we did. We gave guidance to finish the December quarter up 2 cents on sales between $27-$28 million. We'll report those results on Jan. 22.
IBD: People speak of treasure hunts, mapping business strategies, building a road map to peace in the Mideast. Why do maps hold a special place in the public imagination?
Cattini: There's a great quote from Edward Tufte in "The Visual Display of Quantitative Information" about that. He said: "Often the most effective way to describe, explore and summarize a set of numbers — even a very large set — is to look at pictures of those numbers. The most extensive data maps place millions of bits of information on a single page before our eyes. No other method for the display of statistical information is so powerful." |
