A long interview with Mr. Finocchio from a reposter,,,,
Informix Chief: Database Storm Will Soon Pass
Date: 2/10/98
Author: Michele Hostetler
The database is the thing, says Robert Finocchio.
Informix Corp.'s relatively new CEO and chairman
says that's what the database industry needs to
focus on as it tries to weather its latest storm. And
the front seems to be hitting all players with the
force of El Nino.
Giants Oracle Corp. and Sybase Inc. reported
lower- than-expected revenue in their most recent
quarters. Sybase took another punch in January when
it had to restate revenue lower by $43 million
for its past three quarters. Sybase's Japanese subsidiary
had improperly recognized revenue.
And Menlo Park, Calif.-based Informix has its own
troubles. It was forced to restate earnings dating
back to '94 because it reported merchandise sold
before goods actually reached end users' hands. In
November, Informix revised downward its '94-to-'97
results by a cumulative $278 million in revenue
and $236 million in net income.
Shareholder suits and an investigation by the
Securities and Exchange Commission loom. But
Finocchio says Informix's focus on databases
will carry it through the current upheaval.
Finocchio, who joined Informix last summer, is a
former top executive at 3Com Corp. Below,
Finocchio discusses with IBD where the database
industry is headed.
IBD:
Pundits say the database business is slowing this year.
Why do you disagree?
Finocchio:
We think the business has immense opportunity,
especially for our company. As with most markets
that have been around awhile, parts of it are becoming
commoditized, parts of it are maturing. But there are
new markets that are emerging.
Our major competitors are dealing with this phenomenon
differently than us. It's my sense that they
are diversifying out of the database business.
Certainly Sybase appears to be focused more on
middleware and tools than the database market. Oracle
seems to be far more focused on business
applications and consulting than on their traditional core
database systems. We are taking the opposite strategic a
pproach and are focusing on the database business.
IBD:
Where do you see growth opportunities?
Finocchio:
High-performance (databases), Web and content
management . . . large complex (businesses) with
lots of sites, and data warehousing. Virtually all the
customers I have visited have one or more
projects under way in one of these areas. There's
not the same kind of pricing pressure that we
would find in other segments of the market. It's
growing, and customers are willing to pay for value.
IBD:
Which of the three, Informix, Oracle or Sybase,
can benefit most from the troubles of the other two?
Finocchio:
Let the database company that is without sin
throw the first stone.
There are some common trends,
however. It's the practice of doing large enterprise
licenses for multiple years and very aggressive
approaches to revenue recognition.
And certainly Informix had to deal with these issues head
on in (November). The entire industry will have to move
to a new accounting standard . . . that calls for far more
careful metering of revenue recognition.
IBD:
How do multiyear deals affect pricing?
Finocchio:
A lot of these multiyear deals have fueled the pricing
pressure in the marketplace. The pricing pressure in the
marketplace was certainly, in my view, not Microsoft
attacking from the low end. It was Sybase, Oracle and
Informix competing for business in the enterprise
segment, where the product was commoditized.
IBD:
Is Informix's financial restatement now complete?
Finocchio:
The restatement is finished. I now have the benefit of
having the most carefully scrutinized financial
statements probably in existence.
IBD:
How significant is Asia to the database industry?
Finocchio:
For us it's been around 10% of our business. Certainly
there's no way the database industry can
blame its malaise on Asia. We're impacted by Asia
primarily by currency fluctuations, not by
fundamental strength in the Asian marketplace.
I see tremendous vibrancy in Asia as measured in
applications actually being deployed and software
installed. I think we should all be very bullish on
Asia. It's not going to drag the world down and it's
certainly not going to drag us down. I think you
have to take a longer view than 90 days. |
