Good things from Business Week (earnings just a tad optimistic for Q2 - 0.10 - in my dreams - that's 5 million for the Q2 - impossible - figure they meant yearly earnings or else the guy is really optimistic. Nothing here that we did not know already. As usual, a lot of errors here but the coverage does help. Note one subtle important (fluky) thing - no reference to the past tiff with MSFT That alone is worth the name change. They also stole Yocam's line for the header.)
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BORLAND IS BACK, WITH A NEW NAME -- AND NEW PRODUCTS
The name Borland usually elicits one of two responses from people in Silicon Valley. If you're a programmer who has used Borland's developer tools, you probably smile and start talking about how great the products are. If you are an investor who has owned Borland's stock, you probably just groan.
That's because, in an age of high-flying tech stocks, Borland International (BORL) seems to be in a perpetual tailspin. In an effort to pull itself out of its latest one, the company is changing things, including its name. Enter Inprise Corp., exeunt Borland International (stage left). Unlike many such situations where the name changes but not much else does, Borland/Inprise is altering nearly everything about itself. "This is not a turnaround story," says Inprise CEO Del Yocam, formerly of Apple Computer. "This is a transformation."
No longer will the company rely on selling software to individual programmers or consumers. Instead, its focus will be on selling "middleware," a term for software that integrates different computer systems. The primary customers will be large companies that use enterprise software programs, such those produced by SAP, Baan, and Oracle.
In order to become a major player in enterprise integration, Inprise has made a series of acquisitions since Yocam came on board 18 months ago. The most notable: that of Visigenics Software, a middleware specialist, in February.
Long-term holders of the stock have yet to benefit from the company's reinvention: The stock has remained in a tight band between $8 and $10 for the past six months. But that's about to change, according to Burnham Securities Associate Director George Koo, who covers Inprise.
"I think we'll see a spurt in growth over the next couple of quarters," he says. He points out that for the first time, the company will be selling enterprise integration software packages that have a much higher price point (as much as $100,000 per sale), and that generate much higher margins than Borland's previous products. "They are no longer selling shrink-wrapped software. Instead, they will be selling a good product to corporate buyers," he says. Koo expects the company to post modest earnings per share of 10 cents for the second quarter. But he expects a considerable increase by the third quarter.
The key to a turnaround is increasing revenue. The company took in $189 million in sales in 1997 and hopes to improve significantly this year. Yocam expects the company to reach $500 million in revenue within three years. But he's aiming for a stock turnaround before then. "I'm tired of being called a value play," he says. "It's time for us to be a growth stock." We'll see.
By Sam Jaffe
Markets Writer
Business Week Online
Copyright 1998 The McGraw-Hill Companies. All rights reserved. Any use is subject to (1) terms and conditions of this service and (2) rules stated under ''Read This First'' in the ''About Business Week'' area.
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Shane. |
