Elliot, All,
I thought you all would be interested in my recent inquiry to Neal Sanders regarding the state of IAIC/CA alliance and other things in general. Below is the email correspondance that took place between myself and Neal. I would also like to thank Neal for responding to my email so quickly. It does appear that IAIC investor relations are taken very seriously!
...enjoy...
Ty:
My responses are imbedded herein.
Neal
> First let me thank you for putting me on the IAIC email distribution
> list
> for its press releases. I do appreciate it. I would also like to
> compliment you on the job you are doing responding to investor
> inquiries.
> A number of the questions have been sent to you and your answers have
> appeared on various internet message boards and are most helpful. I'm
> sure
> you're aware of the boards that I'm referring to: yahoo and SI
> (silicon
> investor).
>
I actually wince when a reply to an email goes up on a board. The
problem is that my "reply" is always to a specific question and has been framed to respond to that question. When it goes up on a board, the poster can say, " I asked Sanders about (subject) and here's what he said." He or she may have asked a slightly different question. If I *must* be posted, let it be done with both question and answer intact!
> I have a question regarding the CA/IAIC alliance. It is my
> understanding
> that CA will use IAIC's UNICAST/2000 product to fix a number of CA's
> 4GL
> languages. I also understand that this product is made available to
> CA
> customers via CA's Discovery/2000 and NOT in CA's Fix/2000. What is
> the
> difference between the two products and why is IAIC's product NOT a
> part of
> both solutions? Also, is CA's Y2K sales force dedicated to selling
> Discovery/2000 or Fix/2000? I just worry that it is more in CA's
> interest
> to promote their Fix/2000 product (which does not contain IAIC's tool)
> that
> it would be to promote the Discovery/2000 solution and IAIC's
> UNICAST/2000.
> I noticed today that CA has a press release out on a Y2K factory
> involving
> their Fix/2000 solution and IAIC is not mentioned.
>
"Discovery 2000" describes a group of a dozen or more products including UNICAST/2000 and Fix/2000, and it is "Discovery 2000" that the CA sales force sells. Fix/2000 remediates IBM COBOL; UNICAST/2000 in its various flavors remediates ADS, IDMS, Easytrieve, etc. So, UNICAST/2000 is part of Discovery 2000 but by definition cannot be part of Fix/2000. Another way is looking at the CA/IAI relationship is to envision an hourglass. At the wide, top of the hourglass are a variety of very good CA solutions to assess and plan Year 2000 compliance. At the wide, bottom of the hourglass are a group of tools to test code. In between... in that narrow hourglass neck, are just two products... Fix/2000 for a customer's IBM COBOL, and UNICAST/2000 for basically everything else.
> If I may ask one other question (or at least get your opinion on it).
> What
> is management's take on the fact that Y2K toolset companies such as
> IAIC
> (and SEEC, ALYD, PTUS, CSGI just to name of few) seem to lag so far
> behind
> the body shops (like IMRS, SYNT, CBSL, KEA, MIFGY), with respect to
> their
> stock price valuations? The body shops are starting to see their
> stock
> prices coming back and I'm wondering if this is a sign that Y2K is
> coming
> back into favor. We keep hearing that when the flood gates open up
> with
> work requests to fix Y2K problems that the body shops will not be able
> to
> handle the load and/or turn the work around in time and then the
> toolset
> companies (with factory solutions in place) will be called upon to
> handle
> the load. Despite the fact that year 2000 is only 1.5 years away, the
> panic still does not seem to be there. When does management expect
> the
> surge of requests for Y2K fixes to hit?
>
That's a lot of opinions to give. First, the "body shops" as you call
them, are one-stop shops that provide soup-to-nuts Year 2000 compliance. Keane, Computer Horizons, Complete Business Solutions, etc. are going to do well because they're billing time and materials to a group of customers who want the job done, want it done well, and want it done now. They're also larger cap stocks and so attract institutions (who don't want to move a stock five points getting into or out of it).
Then, there's the strictly "tool" companies such as Peritus, Zitel,
Acceler8, etc., which are dependent upon either a) selling their
products to organizations for in-house remediation or b) getting one of the systems houses to standardize on their tool. If the strategy works, they'll show fabulous profits to the bottom line (software margins being what they are). If it doesn't work, they have a huge overhead (for selling and marketing) that isn't absorbed by the resulting level of sales. The added complexity to picking a winner from among these companies is that they're mostly going after the same market -- IBM COBOL. It's a huge market, to be sure, but how many IBM COBOL tool vendors does the world need? (How many brands of spark plugs will the market support? How many manufacturers of razor blades?)
In between, you have companies like IAI, Crystal Systems,
Alydaar, and Microfocus that offer tools and have solutions factories.
The solutions factories are a recognition that most customers lack the
bandwidth to do the job in-house, and want a one-stop source for
compliance. We've recognized that reality and taken steps to address it through our Fairfax Solutions Factory. Our partners, meanwhile, provide a separate flow of customers and revenue. I won't pretend we planned it this way from the beginning, but so far, it appears to have worked to our advantage and we have shown a willingness to adapt to change.
Now, is Y2K coming back into vogue? I monitor the press every
day for articles of interest, and there certainly has been a pickup in press coverage (some of it frightening). Investors -- and especially institutional investors -- are looking for companies that have a credible strategy for the Post-2000 world. Even if, as now seems clear, there's plenty of scrambling to be done in 2000 and even 2001, the market will eventually draw to a close. What do we do for Act II?
For us, it means going back to migration and modernization (from whence we sprang), but with a must larger customer base and a pent-up demand for such services. UNICAST plays a major role in that strategy. My job is to demonstrate that there's real thought behind the strategy.
Regards,
Ty |
