Vendor Seesaw Skews Forecasts -- Product problems, leadership changes
keep Wall Street guessing
John T. Mulqueen
Predicting the success of computer and networking vendors in 1998 is
likely to be more challenging than ever following the wild swings of
1997.
Some companies were victims of their own mistakes, such as Ascend
Communications Inc. having to take charges for 56K modem returns and
3Com with its inventory problems following the merger with U.S.
Robotics. Some others, notably Informix and AT&T, were beset by
management problems. Others were blindsided by Asian currency problems,
most notably Oracle, and those problems may have a broad impact in 1998.
Ups And Downs
AT&T had its share of problems. It stumbled through embarrassing
management changes when John Walter quit as president after less than a
year on the job. The company also saw merger talks with SBC
Communications Corp. fall apart. It began to repair some of the damage
when it hired Michael Armstrong from Hughes Electronic Corp. as chairman
and CEO, replacing Robert Allen. Like Allen, Armstrong faces significant
challenges.
Frank Governali, a securities analyst at Suisse Credit Bank, thinks AT&T
may be able to grow its revenue by 5 percent in 1998, to $54 billion, if
it recaptures momentum in its core long distance business, has an uptick
in the wireless market through its personal communications service
operations, and rolls out fixed wireless services.
Still, for all the mishaps, there were success stories. Cisco, Lucent
Technologies Inc., Compaq and Microsoft all maintained strong leadership
positions in their respective markets. None had serious missteps in 1997
and, unless Microsoft's legal troubles increase significantly, none is
expected to face overwhelming threats in 1998.
But the events of 1997 show that's no cause for complacency. Informix,
for example, seemed to be gathering steam as a strong second-place
challenger to Oracle's database dominance. With-in six months, however,
Informix had nearly collapsed as news of one miscue after another
streamed out of its finance offices.
Loyal Customers
Some customers hung on. Larry White, president of Hyperzine
Communications Inc., a developer of Web sites and publisher of an online
magazine for photographers, said he is sticking with Informix, mainly
because it would be too difficult to migrate all his applications to
another database platform.
It remains to be seen whether that type of guarded loyalty will carry
Informix through 1998. But Informix was not the only database vendor to
limp out of 1997.
Oracle crashed spectacularly in December, reporting disappointing
earnings. Oracle blamed Asian economic upheavals and a sharp falloff in
sales to U.S. telecommunications carriers for the tumble, which caused
its market value to nosedive.
The third largest independent database vendor, Sybase, seems to have
escaped some of this turmoil. Its September earnings report was so
positive that Marshall Senk, a securities analyst at BancAmerica
Robertson Stephens, San Francisco, raised 1998 earnings-per-share
estimates to 51 cents from 44 cents, and also raised revenue projections
mildly upward. New products and a revived sales force should drive
sales, Senk said.
Larry Quinlan, director of practitioner support services for Deloitte
Touche, said the database market is still big enough to support Oracle
and other vendors, but Oracle seems to have taken its eye off the
market.
Microsoft's main threat, meantime, seems to be from the government, not
any competitor, he added.
A Wake-Up Call
Oracle chairman Larry Ellison "got caught paying too much attention to
network computers," Quinlan said. "This was a wake-up call to pay more
attention to database systems and let the computer companies worry about
network computers."
Deloitte uses Oracle for mainframe applications, but has standardized on
Microsoft's SQL Server database and Windows NT as its network operating
system.
That is not the way Gary Habermann, associate director of Widener
University's computer systems department, said he sees it. He's down on
NT because he said it is "not robust," does not easily support ATM
interface cards and is difficult to configure.
As for Microsoft's troubles with the Department of Justice, Habermann is
happy to see the government go after the Redmond, Wash., giant. "It is
about time," he said. "Bill Gates has been bullying people for too many
years. Someone had to tell him: 'You can't rule the world and control
everything from the operating system to the Web browser to
applications.' Somebody had to stand up and say, 'we did it to AT&T and
we can do it to you.' "
Widener University uses Net-scape's browsers and servers.
Copyright (c) 1998 CMP Media Inc. |
