INTERVIEW - Cognos CEO upbeat on growth outlook
November 9, 1998 08:10 PM
Eric Auchard
NEW YORK, Nov 9 (Reuters) - Cognos Inc. CA:CSN COGNF President Ron
Zambonini said he expects long-term growth to pick up from current levels of just over
20 percent per year as fast-growing Internet software revenues displace sales of older
products.
In the near-term, the chief executive said in an interview on Friday he was confident
Cognos can meet analysts' expectations for earnings and revenues for the rest of its
fiscal year, which ends in February 1999.
Over time, the company's growth rate will move closer to the 30 percent or better it is
experiencing in its core data mining software business -- the area that should
represent about three-quarters of the more than $300 million in revenues that analysts
expect the company to report this year, he said.
In addition, Cognos revenues from its 30-year-old line of mainframe software
development tools should remain stable this year and not decline as originally
expected, Zambonini said. However, he added that such revenues should decline over
time.
Referring to the 30 percent plus annual growth rate for the company's core data
mining or so-called "business intelligence" software, Zambonini said "We see
ourselves as being able to maintain that rate for some time."
For the year, Wall Street is looking for revenues of around $304 million, up from $245
million in fiscal 1998 and for earnings of $1.35 per share for fiscal 1999 versus $1.11
per share last year, he said.
"We're comfortable with 35 cents for the third quarter and we're comfortable with
estimates for the full year," he said, referring to the third quarter consensus estimate
and to projections for both revenues and earnings for fiscal 1999.
Cognos is a leading supplier of so-called business intelligence software used by
companies to track trends in key business operations by mining huge organizational
databases.
Measured in revenues from business intelligence software, Cognos has about 26
percent of the market, ahead of rivals Business Objects SA BOBJY , Brio Technology
Inc. BRYO and units of Oracle Corp. ORCL and Seagate Technology Inc. SEG ,
Zambonini said, citing industry statistics.
He said Microsoft's MSFT new thrust into the database management market is a
watershed event for the business intelligence industry and should help further
legitimate the uses of such software and expand Cognos' potential market.
Microsoft is set to announce next week its long-awaited SQL Server 7.0 database
system, which allows companies to run their corporate databases over low-cost
personal computer networks.
"We believe the market is now going to shift toward medium-sized and smaller
companies," Zambonini said of Microsoft's effect on the market for database tools,
which now largely consists of the world's largest 2,000 or so companies.
Sales of the company's newer Internet-ready products are fueling the company's
growth and will account for half of the $230 million in revenue that analysts project
from business intelligence products this year, Zambonini said.
The company's data mining software tools, which previously were designed to operate
on closed local area networks, now run over company intranets, or Internet-based
office networks.
Fueled by the need to update older computer systems to make them ready for the
Year 2000 date changeover, the older Cognos revenue stream should hold steady at
$70 million for the year ending in February, unchanged from year-ago levels, he said.
((-- Eric Auchard, New York newsdesk, 212-859-1840)) REUTERS |
