Goldman's tech show--By CBS MarketWatch--Last Update:7PM EST Feb 11,99
(EXDS) CEO Ellen Hancock told investors her
company is looking for three new sites to locate data centers to
handle traffic from companies that experience heavy Web
traffic, such as Yahoo! Inktomi and CBS Sportsline. Appearing
at the Goldman Sachs technology conference in New York,
also said the company plans to expand the percentage of
revenue it draws from managed services up to 20 percent of its
total revenue by the end of this year, up from 14 percent in the
most recent quarter. One such service is electronic vaulting,
used by companies in earthquake sensitive areas who wish to
create backup data sites away from their home offices.
Sybase (SYBS) CEO John Chen surprised conference by
predicting sequentially improved operating profit margins,
which he said would reach the high single digits by the end of
this calendar year. He also said the company will ship its Fix
product, a database communications-system between
financial institutions, on March 22. Looking ahead, Chen said
Sybase will ship its OFX enterprise-middleware product in the
spring. This year, the company also will convert 400,000
PowerBuilder users to Web-enabled applications by the end of
the year. Sybase shares rose 1 3/16 to 9 1/16, or 10 percent,
following Chen's appearance at the conference. See full story.
Demand for StorageTek's (STK) new 9840 tape storage
product is more than the company can meet, said CEO David
Weiss. He said he expects StorageTek to have shipped 3,000
by mid-first quarter. "There are all the indications that that kind
of demand will continue," Weiss said. Wall Street knew the
tape storage product was hot. The question remains whether it
will offset slower growth in some of the company's older
products. Goldman analyst Laura Conigliaro said she thinks
the 9840 has the ability to surprise on the upside for at least
one quarter this year. Weiss also said announcements should
be expected at midyear from Internet service providers offering
StorageTek's backup product, through which ISPs can provide
customers the capacity to back up their laptops for a fee.
Another Internet application for StorageTek involves storage
and e-mail; it is to be introduced this spring. See full story.
Motorola (MOT) Senior Vice President Fred Shlapak said the
company's chip unit continues to focus on cutting costs.
"Everything's about cutting costs," Shlapak explained. "If you
don't focus on it, you can't stay in this business." He said
Motorola has struck up an alliance with Siemens, and he
announced that the companies' first 300-mm wafer technology
chip was produced Thursday. He said he foresees 9 percent
growth in the chip business this year and called Motorola's
semiconductor unit lean and refocused.
Altera Corp. (ALTR) CEO and Chairman Rodney Smith says
the developer of programmable-logic chips and tools saw
sales growth of 4 percent in 1998, far greater than the negative
performances of its competitors. Smith said the
telecommunications industry has largely driven growth "for the
past few years." Altera reported record earnings of 42 cents a
share in fourth quarter 1998. Smith said he expected the
company's acquisition of Wafer Tech to break even by
mid-year. Smith said the company's programmable chips give
networking equipment companies such as Cisco Systems
(CSCO) the flexibility "to change their products much more
quickly."
American Airlines (AMR) Chief Information Officer Scott
Mason didn't have much to say about the company's trouble
with pilots, but said the airline's IT spending went up with Y2K
and is staying at that higher plateau even as year-2000-related
costs start coming down. Mason was one of four CIOs at a
luncheon presentation at the Goldman Sachs symposium.
Mason said the airline's IT spending priorities are its Web
presence, speech recognition and data warehousing and
mining. Time Warner's (TWX) vice president for information
technology, John Reece, said his company is also spending on
network security.
Cambridge Technology Partners (CATP) is looking for a
rebound in the second half of this year to raise overall revenue
growth by 30 percent for 1999. CFO Arthur Toscanini expects
the IT consulting and services company to reach $1 billion in
revenue by 2001. Interactive services, or building
business-to-business sites, is expected to be a big growth
driver, with the unit seen growing 90-100 percent over 1997 to
bring in $100-120 million of an estimated overall revenue
between $748-795 million. Toscanini told
CBS.MarketWatch.com that CTP isn't interested in becoming
acquired. "We're very committed we can grow it ourselves. We
don't need to be acquired. We're not actively looking unless
we're the acquirer." But he expects consolidation in the
consulting business at some point, with some 30 companies
competing.
Maxim Integrated Products (MXIM) CFO Michael Byrd said
the maker of analog integrated circuits expects to maintain or
increase operating margins even as digital chip makers suffer
from overcapacity and shrinking margins. Byrd said the
California company, like all analog chip makers, benefits from
long product cycles and steady demand for devices such as
temperature regulators and power monitors. Byrd
acknowledged the company in its view for fiscal 1999 after the
company reported net income of $46.5 million for its second
quarter vs. year-ago income of $42.8 million. Byrd boasted that
his company, one of the largest maker of analog chips, has
given investors an annualized return of 50 percent a year since
June 1990. As for the Web, he said 10,000 "data sheets" are
downloaded each day. "Yahoo! (YHOO) is proud of their
[accomplishments]," he said. "We have 10,000 people coming
to the Web site every day."
PSI Net (PSIX) will look overseas to speed its growth.The Net
service provider's CFO, Ed Postal, said the company has
made 18 acquisitions in the past 12 months and is focused on
making more in the near future. Business will be driven by "the
need for more and more businesses to have global access to
the Internet and by companies who want their presence
accessible throughout the world," he said Thursday.
High-growth areas include Canada and Asia, he said. Europe
is also a target, although Postal said it's not growing as quickly.
Postal said the company plans to invest another $600 million in
its network, although he gave no timeframe.
Novell (NOVL) CFO Dennis Raney outlined plans that he said
would let the software company "own the directory market" by
year-end. Novell's strategy involves selling a new cache
appliance that runs on Intel chips by midyear. The product will
be marketed through computer makers, Raney said Thursday.
Novell also plans to expand its consulting and training
business. Raney says he expects 40 percent annual growth
from directory enabled applications, and 15 percent growth in
directory-enabled platforms, through 2002. See full story.
Hewlett-Packard (HWP) is positioned to thrive in the next
chapter of the Internet, executive vice president Ann Livermore
told investors. "It's widely perceived that we missed the first
chapter," Livermore said. "We're going to right that." The
company plans to provide a range of products and services --
from computer chips to network security -- to meet the
demands the Net is creating. H-P plans to form partnerships to
capitalize on the proliferation of e-services. "Where we can't be
a force, we'll choose a partner who is," Livermore said. One
investor said he wasn't sure H-P would be able to catch up to
competitors, such as IBM (IBM). See full story.
Ziff Davis (ZD) CFO Tim O'Brien said the ZDNet IPO road
show is scheduled to start in March "at the latest." The tech
publisher is planning to spin off its Internet properties to take
advantage of high valuations accorded Net companies.
O'Brien said Microsoft co-founder Paul Allen invested $54
million in ZDTV last week after a ZD board member helped
broker the deal. "We discovered we had a lot of common
ideas on technology and television," O'Brien said of the
previously announced deal.
Intuit Inc. (INTU) senior vice president Raymond Stern said
his company will consider buying other companies to improve
its position in financial online services this year. Intuit has
signed up 33 financial institutions to help sell its online tax filing
service. When asked how Intuit plans to invest in the Internet
and still meet Street expectations for earnings, Stern said it is
a "delicate balance." He said the company would consider an
acquisition that would be an "earnings drag." Stern later said
that the company might consider buying "consolidation plays"
such as independent mortgage and insurance online
specialists. See full story.
The Securities and Exchange Commission is considering
accounting reforms that may force hundreds of software
companies involved in acquisitions to restate their earnings.
The move has sparked controversy and intense debate among
analysts, investors and corporate executives. A number of
them turned out Wednesday evening to hear Lynn Turner, the
SEC's chief accountant, address the issue. Turner discussed
the agency's concern that writeoffs used in conjunction with
acquisitions in the software industry create confusion about
disclosure among analysts and investors when they're valuing
companies. They also have the potential to produce "a crisis in
confidence in what reported earnings are," Turner told his
audience at the conference. See full story.
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