This is an article in today's IBD.
VIASOFT INC. Phoenix, Arizona Inspecting Software Bridges To 21st Century
Date: 11/5/96
Author: Reinhardt Krause
Just how serious is the much- hyped year 2000 problem?
Companies trying to assess their risk from this programming problem stalking mainframe computers are turning to Viasoft Inc.'s software tools.
Viasoft's roots are in tuning up mainframes, the old workhorses for corporate data processing. Its tools help companies extend the life of business applications written in COBOL, a bulky programming language for the big systems.
Viasoft's place in solving the year 2000 problem is the result of serendipity.
Decades-old mainframe applications are hanging around longer than
expected - which sets them up for the year 2000 problem.
Programmed with thousands of lines of code, these applications listed
calendar dates simply. Any given year, as in a birthdate, was represented as the last two digits.
But when 2000 comes around, the fear is that many computer systems will crash or continue running with serious errors.
The problem facing computers is to figure out which century it is. Dates may revert back to 1900 instead of being set at 2000. Billing, payroll, insurance claim processing and other applications could be affected.
Or they might not. The problem could be overblown, some industry analysts say.
The hype surrounding the year 2000 problem drove up the stock prices of at least a dozen companies earlier this year. They included system integrators, contract consulting and programming companies, and software vendors.
''There has been a huge amount of hype behind the market, and the stocks appreciated incredibly and then rolled back as an industry - sort of being tarred with the same brush,'' said Alexander Arnold, financial analyst with H.C. Wainwright & Co. in Boston.
''But there are individual stories driving different stocks now, which I think shows some sign of legitimacy,'' he added.
Viasoft was started in 1983. But the company began prospering when a new management team was installed in mid-1993.
Its business turned profitable in 1994 when sales hit $25.9 million.
Revenue, including software license and maintenance fees, grew steadily the last two years. Sales climbed 41% to $43.5 million in the 1996 fiscal year ending June 30 from $30.9 million in 1995.
Corporate awareness of the year 2000 problem is starting to kick in.
''The typical Fortune 1000 organizations that we walk in to and talk to, after they do some analysis, believe in many cases it's at least a $10 million problem,'' said Steven Whiteman, Viasoft's president and CEO.
Viasoft now garners about a quarter of its revenues from professional
services, which reached $11.3 million in 1996. These services are getting a big boost from Viasoft's year 2000 software offerings.
Its tools aid corporations to assess the risk that their computers may run amok.
The tools help determine the scope of the problem - how many lines of
programming code are affected by the date change. The tools also identify the level of effort needed to make changes.
At a later stage, Viasoft's tools automate data conversion. As a result, software programmers do not need to fix year 2000-related code manually. That saves time and money.
''It's not a silver bullet solution; there isn't one,'' said Arnold of Viasoft's software. ''It's a tool that aids in a very complicated process. The overall business here is probably project management, because the task is enormous.''
Many other software companies are targeting the year 2000 problem.
Viasoft's rivals include Micro Focus Group, Platinum Technology Inc.,
Alydaar Software Corp., Intersolv Inc. and Computer Associates
International.
''Our market before this has been helping people deal with complex
maintenance issues,'' Whiteman said. ''Some of these other companies, for the most part, have gotten into year 2000 very opportunistically.''
He added that Viasoft began focusing on year 2000 products about three
years ago.
Viasoft also competes with system integrators and computer consulting firms that rent out programmers. These companies include Electronic Data Systems Corp., Ciber Inc. and Computer Horizons Corp.
On the other hand, Viasoft has licensed its technology to service providers such as Keane Inc., Andersen Worldwide's Andersen Consulting unit, Logica PLC and CACI International Inc.
One of Viasoft's challenges is to meet demand.
In its initial public offering in March, the company raised $12.1 million earmarked for working capital and other purposes.
Viasoft is joining with other companies to expand its reach. It has distribution deals with Comdisco Disaster Recovery Services Inc., Computer Aid Inc. , and PRT Group Inc .
About a quarter of Viasoft's sales are foreign-based. It supports seven field offices, including locations in Germany, Japan, and Australia.
For the first quarter ended Sept. 30, net income rose 65% to $1.56 million from $941,000 a year earlier. Earnings per share climbed 50% to nine cents from six cents on 4% more shares outstanding. Sales rose 66% to $14 million from $8.4 million. |
