Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Market Gems:Stocks w/Strong Earnings and High Tech. Rank -- Ignore unavailable to you. Want to Upgrade?

To: Connor26 who wrote (84720)	2/25/2000 1:11:00 PM
From: Jenna	Read Replies (2) \| Respond to of 120523

Hard to post today.. Just wanted to reprint an article from IBD on ALLR. Also there is an excellent article feature actually on the today's front page called TECH AMBITION.. New Dream takes Over In Israel as Nation Becomes Industry Hub... ALLR Can a company's product be too successful? It's a legitimate question, if you're Allaire Corp. The Web development software maker has stamped itself as an industry leader, thanks to the runaway success of its flagship product, ColdFusion. The software lets developers quickly build Web sites ready for electronic commerce. One problem. "You talk to some of these developers about Allaire, and they may not know what you're talking about," said Forrester Research analyst David Truog. "ColdFusion has made such a huge impression on the development community. It probably has more name recognition than Allaire does." ColdFusion's success - more than 500,000 developers worldwide know how to work off the product's platform - is a problem plenty of other companies would kill for. But Allaire does not want to be known as a one-trick pony. That's one reason the firm has galloped out of the gate this year with its new product, Allaire Spectra. Big Risks ColdFusion is the application server, the "backbone" needed for a Web site to function. Spectra is the software package that sits atop the application server. Working in tandem, the two products enable programmers to combine purchasing, content management and personalization features as a finished product for consumers. Spectra's introduction comes fraught with risks. Allaire faces three formidable foes in e-commerce software leaders BroadVision Inc., Open Market Inc. and Vignette Corp. The new software also takes some of Allaire's focus away from its bread and butter, ColdFusion. That's a dicey proposition, given Allaire's rapid ColdFusion-driven sales growth. Revenue jumped 166% to $20.5 million in 1998, then spiked another 169% to $55.2 million last year. A company making a name for itself is nice. But that's not the only reason Allaire introduced Spectra. Forrester Research Inc. says ColdFusion's application server marketplace should grow to $3.2 billion in 2002 from $692 million last year. $13.3 Billion Market That may seem impressive, but commerce platform software like Spectra has an even brighter future, International Data Corp. says. Sales of those products should move to $13.3 billion in 2003 from $1.7 billion in 1998. Allaire is already reaping the benefits of this hot commerce software market. The firm announced last week that it has nabbed 50 new Spectra customers. "ColdFusion will still help bring thousands of companies online," said David Orfao, Allaire's chief executive. "We plan on leveraging our strength in the application server market to make our solutions side more successful." Another impetus for Spectra is the threat coming from well-heeled rivals in the application server market. Giants such as Microsoft Corp. give away plenty of similar software, at times making it tough for Allaire to sell its products. Sun Microsystems Inc., meanwhile, has become a power in Java-based application servers. Avoiding Past Mistakes Allaire also wants to avoid the fate of some long-gone software makers, Truog says. A few years ago, many small software companies had success selling products to operating-system vendors. But Microsoft and Apple Computer Inc. eventually began absorbing those firms' technologies. "Those little guys just disappeared into Windows or Mac OS," Truog said. "Companies like Allaire realize that application servers are like operating systems. You have to stay above the rising tide to survive." Competition for talented software developers has been fierce, Orfao said. To that end, several companies have gone on buying sprees to lure talent. Allaire bought Live Software Inc. last July for $32 million in stock, and acquired Valto Systems Inc. in a separate $35 million stock deal. Those companies have enabled Allaire to turn to a more standard-space application server environment, thus attracting more Java programmers. BroadVision and Open Market have made similar moves, acquiring Interleaf Inc. and FutureTense Inc., respectively. "It's an extremely competitive field, but it's also a very unpenetrated market," said Simon King, BroadVision's vice president of products. "As things firm up, you'll see more acquisitions, more consolidation." Army Of Resellers The biggest difference between Allaire and its competitors may be the firm's sales and marketing strategy. Allaire boasts more than 1,800 partners, including an army of resellers who market the company's products and a fleet of strategic partners who help customers implement ColdFusion and Spectra. That tack has limited revenue from services to about 15% of Allaire's total sales. Some rivals garner as much as half their sales from services. So why bother farming out those tasks? Orfao says Allaire's distribution partners have allowed the company to slash sales and marketing costs. The result: healthier margins. Allaire celebrated its first-ever profitable quarter in the period ended in December 1999. The company earned 3 cents a share vs. a 54-cent loss the year before. Sales rose 164% to $18.3 million. For the year, Allaire narrowed its losses to 25 cents a share from $2.20 in 1998. Analysts expect the company to earn 32 cents in 2000, followed by a 131% gain to 74 cents in 2001, First Call says. The firm sells as ALLR near 117.