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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: StanX Long who wrote (45634)	4/20/2001 12:54:48 AM
From: StanX Long	Read Replies (1) \| Respond to of 70976

Sybase sees software turnaround Database company's Q1 profits meet lowered estimates By Mike Tarsala & Debra McGarry, CBS.MarketWatch.com Last Update: 9:31 PM ET Apr 19, 2001 EMERYVILLE, Calif. (CBS.MW) - Sybase announced earnings Thursday that met Wall Street lowered expectations on slightly improved sales of its flagship database software. Meanwhile, John Chen, the company's chief executive, made his case for an economic turnaround in the second half of the year that will lift Sybase, as well as the rest of the software industry. "I don't see the world getting better quickly, but I do see the second-half being stronger -- both technology spending and our results." Chen told CBS.MarketWatch.com. Sybase's (SYBS: news, msgs, alerts) pro forma net income rose 16 percent to $22.7 million, or 25 cents a share in the first quarter, compared to $19.5 million, or 21 cents, in the same period a year earlier. Quarterly sales were $229.1 million vs. $226.8 million a year ago, lower than Wall Street expectations, but in line with the worst-case sales scenario the company laid out in a warning earlier this month. Sales of database software, which makes up about 70 percent of the company's revenue, increased 2 percent year-over-year. The company generated about $70 million in cash during the quarter, and it spent about $50 million to buy back Sybase shares on the open market. Sybase said it had $348 million in cash, or about $4 of cash per share, and no debt. On April 3, the Emeryville, Calif.-based firm company said that purchase delays by its large customers and scaled-back orders blamed on a slowing economy would cause a sales and earnings shortfall. As a result, Sybase said Thursday that it also expects pro forma net earnings for 2001 to come up short. The bottom line in 2001 will be about $1.10 to $1.20 a share, or lower than analysts' consensus estimate of $1.29. Trouble with delayed purchases could linger in the second-quarter, as Sybase said it expects similar levels of profit and sales reported in the March quarter. But in the second half of the year, Chen says businesses for Sybase and many of the software makers could start to improve, as business customers spend the remainder of their 2001 technology budgets. "When we talk to the CEOs and the CIOs of the world, we find that IT budgets haven't been cut, overall," Chen said. "It's just that in the first quarter, they've been very cautious not to spend. They're adopting a wait-and-see attitude. The problems are more about spending confidence than actual budget cuts." Spending in the third and fourth quarters could be much stronger than the first part of the year, as some company's rules dictate IT departments to either spend their remaining technology budgets, or forfeit them. Chen also contends that the software industry, in general, lags the computer hardware industry. According to quarterly conference calls hosted by executives at Intel and Microsoft, the hardware market may be showing signs of a second-half turnaround. Other reasons Chen feels more confident about the second part of the year involve the company's purchase of software-integration-company New Era of Networks Inc. Sybase expects to acquire the remaining shares of the company, in hopes of adding 20 percent to the company's long-term revenue. New Era of Networks on Thursday posted a first-quarter loss in line with Wall Street expectations and said it had cut 148 jobs, or about 13 percent of its total work force. Chen said the combined companies will have no more than 5,500 employees, so the two companies are expected to cut more than 300 jobs. Sybase employs about 4,860, while NEON's head count is 960. Sybase (SYBS: news, msgs, alerts) shares closed up 80 cents, or 5 percent, at $17.07 in Nasdaq trading. Mike Tarsala is a San Francisco-based reporter for CBS.MarketWatch.com. Debra McGarry is a reporter for CBS.MarketWatch.com in San Francisco.