Quarterdeck Officials Optimistic Hard Times Are Past
By Anthony Palazzo
PASADENA, Calif. (Dow Jones)--It's been a rough couple of years for Quarterdeck Corp. (QDEK).
Until 1996, the Marina del Rey, Calif., company prospered selling memory-enhancing and storage-conserving applications for personal computers running Microsoft Corp.'s (MSFT) old Windows 3.x software.
Then Windows 95, Intel Corp.'s (INTC) Pentium chip and ever-larger hard drives made Quarterdeck's offerings unnecessary to many PC users. The software maker was derailed from its growth trajectory and entered a painful era of job cuts and retrenchment. Revenue crumbled, as did the stock price - it was trading at 2 early Wednesday afternoon, down from a high of 39 1/2 in the fourth quarter of 1995.
Now, Quarterdeck is on the cusp of a turnaround, its top officials say.
Overhead has been trimmed, the balance sheet and product line shored up, and a new marketing strategy put in place, Chief Executive Curt Hessler and Chief Financial Officer Frank Greico told Dow Jones in a recent interview.
Quarterdeck is poised to report on Thursday an increase in net revenue, or revenue after product returns, for the first quarter ended Dec. 31, from the $15.2 million reported in the fiscal fourth quarter, Greico said. He declined to say whether net revenue would reach the point, at around $20 million, where Quarterdeck would break even in net income.
"A lot will depend on revenue recognition," which will remain conservative, Greico said.
Days sales outstanding, a measure of receivables, will probably be between 40 and 50, compared with 42 in the fourth quarter. He said the probable rise will be the result of several new-product and upgrade releases, he said.
Quarterdeck has cut overhead by integrating the operations of numerous acquired companies, shedding noncore assets and outsourcing its telemarketing operations, Greico said. He projected general and administrative expenses of $10 million-$11 million in the fiscal year ending in September, down from $17 million in fiscal 1997 and $32 million in fiscal 1996.
Quarterdeck -2: CEO, CFO Recently Bought Stock
Chief Executive Hessler, Chief Financial Officer Greico and other Quarterdeck officials and directors recently signaled their confidence in the company with modest open-market purchases of its stock.
A new marketing strategy positions Quarterdeck as a company whose products can prevent or solve PC users' problems, reducing the need for technical support. With its line-up of problem-resolution, storage-management, antivirus, system-configuration and network communications products, Quarterdeck hopes to expand its market from a retail base to small-business and home-office PC users.
"People who used to be (single) end-users are now becoming part of a network but can't afford an MIS department or to wait on the phone to get help," said Hessler, who joined the company about a year ago.
The prodigious amount of junk being downloaded from the Internet is reinvigorating demand for such products as CleanSweep. Quarterdeck's market-leading uninstaller software sold an estimated 55,000 units in North America in December, Greico said.
"Hard disks are getting bigger and bigger, but they're filling up faster and faster," Hessler said.
The Internet has also created opportunities for new products like TuneUp.com, an on-line PC service center acquired by Quarterdeck in August.
"We expect it to grow over time to be an important strategic element of the company," Hessler said.
- By Anthony Palazzo; 626-798-7628;
tony.palazzo@cor.dowjones.com
"Dow Jones News Service"
"Copyright(c) 1998, Dow Jones & Company, Inc." |
