April 23, 1998 4:45 PM PDT

Sybase misses by a mile

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Troubles at Sybase were not taken lightly by Wall Street today, as the stock fell nearly 20 percent after the database software maker missed expectations by a wide margin yesterday.

The company?s stock dropped 2.06 points, to 8.31, down from Wednesday?s close of 10.38. After the markets closed yesterday, the company posted a net loss of $29.6 million, or 37 cents a share, compared with a net loss of $66.2 million, or 8 cents a share, for the same period a year ago. The results exclude a restructuring charge of $51.6 million. Figures from the 1997 quarter were restated due to problems with Sybase's Japanese subsidiary.

Accounting for the charge, the company reported a loss of $81.2 million, or $1.01 per share.

The earnings fell well below analysts' estimates of a loss of 11 cents per share, according to First Call.

Revenues for the quarter were $206.8 million, down from $243.7 million reported a year ago.

Database software firms have experienced tepid growth for their core database technologies during recent quarters. Sybase and Informix Software have been hit particularly hard by the market evolution.

Sybase, however, restructured it operations Sybase at a glance during the first quarter and revised its focus to take advantage of growth in certain markets, such as data warehousing and Web computing, according to John Chen, the company's president and CEO.

"We have parts of the company that are firing on all engines, but we have some that are in need of improvement," said Mitchell Kertzman, chairman and co-CEO of Sybase. "The enterprise software market for people like ourselves continues to be a challenge."

Sybase executives highlighted adoption of the company's technology in the international markets, with quarter-to-quarter growth of 61 percent. The company has also had success in selling consulting and professional services. But Sybase's sales force in North America has been a weakness, according to Kertzman.

"We really need to improve performance in North America," he added.

Co-CEO John Chen said he expected improvement in second-quarter results but is betting on the second half for a turnaround. "I don't really expect an instant miracle in Q2."

The company experienced a nearly 25 percent drop in revenue from license fees for the quarter. "It is a reflection of our North American sales operations."

Sybase appointed Michael Gardner as the new senior vice president of worldwide sales in February.

Executives said they are on target to return to profitability and expand the business in the second half of this year after reducing expenses in the first quarter. "I think we did what we hoped to do," Kertzman noted. "We still have confidence in our products and our plans."

Kertzman said in an interview last month that software sales may slow over the next couple of years due to Year 2000 issues and economic uncertainty in Asia. The company announced that Chen would become become co-CEO with him in February. (Kertzman is a board member of CNET: The Computer Network, publisher of NEWS.COM.)

 

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