Mark, I have to jump in here with an observation. How come no one has mentioned the breakout of revenue indicated in the 10K?
PC Card revenues increased 12% from $14.8 million in FY 1996 to $16.5 million in FY 1997, indicating a clear slowdown in SYSF's core business, and no doubt why the company jumped on the SYSWIZ bandwagon. They obviously realized system software was becoming a commodity and needed to shift to a non-commodity business. PC Card revenues slipped 1% to $16.4 million in FY 1998, confirming management's negative take on their business. The Asian business accelerated the decline of that segment of the company's business. Award clearly contributed to this decline, but these things happen when business becomes commodity.
Meanwhile, Platform products showed a 50% revenue increase in FY 1997, coming off a $6 million prior-year base. Platform products probably is a euphemism for "Scambling System Software Niche Markets". This scrambling continued successfully in FY 1998, leading to a 39% revenue increase.
But the real scramble was with SYSWIZ. No revenues in FY 1996, but $6 million by FY 1997. The interesting thing, however, is that FY 1998 SYSWIZ revenues jumped 146% to $14.8 million. That's not the $40 million we hungered for just from AST in FY 1998, but it shows SYSWIZ is real and apparently growing rapidly.
As we start FY 1999, SYSF has three businesses: PC Card, Platform products, and SYSWIZ, all about the same size. If PC Card stays flat, Platform products slows to 25% increase, and SYSWIZ comes in at a double. Revenue should increase 41% for the year. That would provide the company with record revenues, and should return the company nicely to profitability. But that would still mean SYSWIZ revenues are only $30 million, leaving plenty of opportunity for an upside surprise.
On the WIND thread recently I confessed that I was disappointed in management at SYSF. Clearly they bungled the SYSWIZ debut, and the last quarter was an unmitigated disaster. On the other hand, how many managers would have the foresight to see a commodity market developing, determine a better business, get a giant to underwrite the development, and raise it up to par with the core business, with a huge non-commodity growth potential, all within two years? The Platform products segment was a successful backstop in case SYSWIZ failed.
Does this thread owe Bob Angelo an Apology?
Allen |
