But Wait, There's More

Some Midrange Software Makers Report Improving Financials

When the IT tide rises, IBM's boat tends to lift up first, and only after a while does the regatta of partners that sail with Big Blue rise. But conditions, at least for the public software companies in the midrange that are compelled by law to talk about how well or poorly they are doing, seem to be improving. However, consumer confidence just took a dive, and that probably means that we are all facing some challenges ahead.

American Software says that software license revenues were up 9 percent, to $3.8 million, in its fiscal third quarter, which ended January 31. However, services sales at the company were down 4 percent, to $6.3 million, and maintenance fees were down 7 percent, to $4.5 million. This dragged down overall sales for the quarter down 2 percent, to $14.6 million. While a revenue decline is something no one likes, growing software licensing fees is the best indicator of future profits, since new customers eventually need services and support. American Software's financials for its fiscal third quarter were a lot better than in the first two quarters, with software sales weaker and maintenance and services sales down even further. If the company can push hard in the next three months, it may even be able to wring a small amount of growth for the whole fiscal year. No matter what, American software still has managed to grow profits by 7 percent for the nine months ended, to $5.5 million, up 50 percent from the prior year's period. The company has no debt and $66.5 million in the bank. To put it bluntly, that financial condition is parallel to that of Microsoft, which has about a year's worth of revenue in the bank and which is struggling to maintain profits in this adverse IT market.

Over at OS/400 application vendor MAPICS, which last year ate a Windows application supplier called FrontStep, total revenues for the first fiscal quarter which ended December 31, 2003, were up 39 percent, to $43 million. Overall software license sales were up 38 percent, to $11.7 million, and software sales to new customers were up 18 percent, to $9.2 million. Services sales were up 39 percent, to $31.3 million. MAPICS was able to bring $2.3 million of its top line sales to the bottom line, an increase of 61 percent, but because the company now has a lot more shares outstanding after the FrontStep acquisition, earnings per share only increased 28.5 percent, to 9 cents a share. The company said that iSeries ERP sales and performance overseas across its OS/400 and Windows platforms did not meet its objectives in the quarter, but added that the pipeline for the OS/400-based MAPICS ERP suite remained strong and that the Windows-based SyteLine ERP suite has been well received by the market. MAPICS said further that for the full year it would have sales of between $170 million and $180 million and adjusted earnings in the range of 50 to 55 cents a share.

PeopleSoft had a better fourth quarter 2003 than it expected, but said that the first quarter might be a bit soft. As the owner of the former JD Edwards, you would think that PeopleSoft is the best barometer for how well the OS/400 application market is doing, but PeopleSoft is so big, and the merger is still underway, so it may not be much of a barometer at all. That said, it is still an important driver of iSeries sales and has one of the largest OS/400 customer bases in the world. For the three months ended December 31, PeopleSoft had software license sales of $186 million, up 29 percent, and services sales of just under $500 million, up 35 percent. Total revenues for the quarter were $685 million, up 34 percent from this time last year, and well above the $625 million to $640 million that the company had told Wall Street to expect. However, the merger with JDE has not come free, with net income dropping to $17 million, down 70 percent from the fourth quarter of 2002. Without the JDE acquisition costs, PeopleSoft said it would have brought $112 million to the bottom line. Of course, JDE is what has allowed PeopleSoft to grow its numbers. While this is decent news, PeopleSoft said that it would have sales of $625 million to $635 million in the first quarter and software license fees of $130 million to $140 million. That was below Wall Street's expectations for the first quarter of 2004, before the guidance given by PeopleSoft's top brass as they announced the fourth quarter 2003 results.

iTera Receives Advanced Business Partner Status from IBM

The hard work has paid off for iTera, but more work lies ahead. Last week the Utah-based vendor of OS/400 high availability software announced it has received Advanced Business Partner status from IBM, giving it entry into the inner sanctum of Big Blue's marketing and product development programs. "Our hard work is clearly paying off," says Dan NeVille, iTera's president. "We are pleased that IBM has given iTera this recognition." Last August, IBM included iTera in a new value added enhancement (VAE) program for data recovery/replication solutions, giving iTera customers some level of discount when they purchase a new iSeries in conjunction with an implementation of iTera's software. The company was not included in the more prestigious High Availability/Continuous Operations VAE program, which brings discounts on bigger, more expensive boxes (Model 825s and up), but it gave them some recognition, so it was better than nothing, which is what they had before. iTera hopes its status as an Advanced Business Partner will pave the way to inclusion in the High Availability/Continuous Operations program. It's also gunning for premiere partner status, Neville says.

GST's New 'Insanity' Program Offers Discounts to IBM Tape Users

The maintenance costs that customers pay IBM for older tape subsystems are insane, according to competitor GST. To address this perceived disconnect from reality, GST last week launched its charitable "stop the insanity" program, in which GST leases customers new tape drives, subsystems, and libraries for the same price that IBM charges, and then sells the units to the customer at the end of the lease (36 months) for one dollar. Companies today pay IBM anywhere from $58 to more than $6,000 per month to maintain their older IBM subsystems, says GST's chief executive, David Breisacher. "For these same monthly payments, we can provide significantly better tape subsystems, autoloaders, and libraries, yet few are aware of the compelling financial case to do so. Our Stop the Insanity program is designed to heighten this awareness," he says. The program includes AIT-2, AIT-3, and Super AIT (sAIT) tape drives, which range from $1,750 for a single internal AIT-2 drive to $205,750 for sAIT, with GST's largest ScalableDR enterprise library. Rebates are also available for customers who turn in their IBM drives. The program lasts through May 31, 2004.

SeeBeyond Aims to 'Integrate the Integration Tools' at IBM Shops

EAI tool vendor SeeBeyond last week launched a new program targeting IBM customers who have had to "integrate their integration tools." The Monrovia, California, company's "Can't Wait to Integrate" program for IBM gives customers credits toward upgrading from IBM integration tools its own Integrated Composite Application Network (ICAN) Suite 5.0. SeeBeyond seized on the fact that IBM's integration software doesn't run on WebSphere Application Server (WAS). By comparison, ICAN 5.0 is fully integrated with WAS. "Where other vendors leave you with the challenge of 'integrating your integration tools,' all the components of ICAN 5.0 work together seamlessly," says SeeBeyond's chief technology officer, Ross Altman. SeeBeyond previously announced a "can't wait to integrate" program for its competitor webMethods.

Vision Solutions a First Mover on New IBM Autonomic Spec

Vision Solutions is working closely with IBM to implement new autonomic computing technology into its cross-platform high availability software, called ORION. The software company announced last week that it's working with IBM on the Common Base Event format, which is a basis for standardizing the exchange of log/trace data relating to problem determination, using Web services. Vision Solutions chief scientist Dave Brown says standards and utilities such as Common Base Event provide a platform on which autonomic features, such as advanced monitoring and self-healing, can be built. "ORION is built with XML-based standards that easily incorporate autonomic architectures when implemented using the Common Base Event format," he says. Vision Solutions says it is one of the first IBM business partners to adopt IBM's autonomic technologies.

The Linux Beacon Previews the New Linux 2.6

A couple of weeks ago, we launched a newsletter called The Linux Beacon, which is dedicated exclusively to the enterprise Linux platform. Our IT manager, Justin Ward, knows a thing or a hundred about Linux, so he thought you might like to see a detailed preview of the features in the new Linux 2.6 kernel. Linux is an adjunct environment to OS/400 on the iSeries, so you might want to take a gander at what new features and capabilities for enterprise server customers have been woven into the new kernel. Take a look at the issue of The Linux Beacon with the Linux 2.6 preview.

Get the Latest OS/400 PTF Guide

Our partner DLB Associates has been keeping track of IBM's PTF updates to OS/400 and its related programs. Here are the latest OS/400 PTF Guides:

January 24

January 31

February 7

February 14

February 21