Someone please stop the bleeding!! Here's a little something to refresh our memories of why we bought into this company, a recent article from IBD:
An Investor's Business Daily article By Alan R. Elliott
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In the software industry, the leading edge can cut both ways. Business Objects S.A. has felt both sides of the scythe.
The company helped pioneer the market for database information retrieval and reporting tools. The accessible programs allow even thick-thumbed managers to search databases and arrange information into custom-formatted reports.
For four years, Business Objects' sales grew upwards of 100% a year. Then in '95, it redesigned itself around the release of Microsoft's Windows 95 operating system. "Business Objects had pushed the envelope on technology, which sounds attractive until you really understand the software business," said analyst Robert Tholemeier of First Albany Corp. "It's a business where you don't want to get ahead of the curve."
Ahead of the curve, in Business Objects' case, meant watching users only gradually upgrade to Microsoft's new 32-bit wonder gear. Meanwhile, the company's cutting-edge products were left with no platform on which to run. As a result, sales growth slowed to 40% in '96 and 34% in '97. Earnings fell 38% and 43%, respectively.
But over the next two years, corporate computer systems did shift to the new Windows platform. In that time, Business Objects' founder and CEO, Bernard Liautaud, reshuffled his company.
"Today, we are in a very strong position from a product standpoint," Liautaud said. "And we've made significant changes in management." Those changes include a new CFO and chief operating officer. The company also moved its headquarters from Paris to San Jose, Calif., to focus on its U.S. operations. Liautaud hopes to boost U.S. sales to 40% of total revenue, up from just under 30% today.
"It's going to take a long time to get there, because European sales are not slowing down," Liautaud said.
Sales in Germany, for example, are growing at 85% to 90% a year. Business Objects covers 40 countries. About 60% of its sales come from Europe and 10% from the Asia-Pacific region.
The company has about 6,200 customers worldwide, up from 4,500 a year ago. Its largest clients are Lucent Technologies, Inc., Shell Oil Co., and Peugeot S.A. each of which has more than 10,000 users.
And there's plenty of room to grow. Faced with the approaching Year 2000 dilemma, many corporations are opting to consolidate and soup up their information systems. And in the process, they create massive databases, says analyst Wesley Golby of Van Kasper & Co.
"It has created a whole new world of data for Business Objects to look at," he said. That world also presents managers with whole new levels of complexity. Information packed into company databases often is, for practical purposes, inaccessible.
"No one knows how to sort through the data and get the information," said analyst Melissa Eisenstat of CIBC Oppenheimer Corp. To get to that data, managers would traditionally go to specialists within their information-technology departments.
"What Business Objects does is provide a way for mere mortals to so into a relational database and do searches and create reports, so you can know what is going on in your business," Eisenstat explained.
The market for query and reporting tools rose 26% to $740 million in '97, says research from Gartner Group. That figure is expected to climb 49% to $1.7 billion by 2000.
Business Objects entered the fastest-growing part of that market when it released its WebIntelligence product last December. WebIntelligence sales in the first quarter reached $3 million. They're expected to top $15 million by year-end.
The company's first-quarter earnings rose 33% to eight cents a share. Total revenue rose 48% to $34.6 million. Revenue is expected to rise 34% in '98 to $114.3 million. Earnings should reach 48 cents a share, up 182% from a weak '97, First Call reports.
Business Objects holds about a 10% share of the market, Gartner Group estimates. That's within striking distance of the 12% share held by Canadian firm Cognos Inc., its closest competitor. Cognos offers search tools generally considered more powerful than Business Objects' products, analysts say. But Cognos sells its wares separately as Web-based and Windows-based search tools. Business Objects offers the two products in an integrated package.
"We believe that (integration) is a clear requirement for the market right now," Liautaud said.
Business Objects trades as BOBJY near 18.
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