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Volume 18, Number 10 -- March 9, 2009

MKS Weathers the Economic Storm in Fiscal Q3

Published: March 9, 2009

by Timothy Prickett Morgan

Application lifecycle management software maker MKS polished off its third quarter of fiscal 2009 on January 31, and the strengthening of the U.S. greenback against the Canadian looney, as well as plain old-fashioned growth, helped the company turn in a pretty good quarter, considering how tough the economy is.

MKS, which is a public company whose shares are traded on the Toronto Stock Exchange, reported $13.2 million in sales in the quarter (that's in U.S. dollars using U.S. accountancy rules), up 3.2 percent. The company's license sales in the quarter dropped by 10.1 percent to $3.7 million, but a 6 percent increase in maintenance fees, to $6.98 million, and a 20.9 percent jump in services revenues, to $2.52 million, more than made up for the declines in software licenses in the quarter.

For the company's ALM tools, of which Integrity is the flagship brand, license fees fell by 12 percent to $2.8 million in the quarter, but ALM services fees rose by 21 percent to $2.5 million and maintenance relating to the ALM products rose by 8 percent to $6.3 million. Overall ALM sales rose by 5 percent to $11.6 million, and ALM products accounted for 87.9 percent of total sales at MKS in fiscal Q3.

MKS trimmed its costs and brought $325,000 to the bottom line in fiscal Q3, which is a lot better than the $754,000 loss it had in the year-ago quarter.

"We were pleased to report continued growth in revenue and profitability for the current quarter and the first nine months of this fiscal year," said Philip Deck, chief executive officer at MKS, in a statement accompanying the financial results. "We also enjoyed strong cash generation as we completed our largest seasonal quarter for maintenance renewals and collections."

For the nine months ended in fiscal 2009, MKS has booked $44.8 million in sales, up 12 percent, and has brought $2.3 million to the bottom line, compared to a loss of $877,000 for the first three quarters of fiscal 2008. Perhaps more significant in these times is the fact that MKS is now sitting on $16.3 million in cash and equivalents, up from $10.6 million when the quarter began.

Cash is king right now, and credit is queen. If you have both, you have a pretty good chance of riding out this economic storm, provided it doesn't gale for too long.


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Editor: Timothy Prickett Morgan
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TABLE OF CONTENTS
Getting Dizzy from Dynamic Infrastructure

The Economy Gives the Server Biz a Flat Tire in Q4

Infor Battles Customers in Court Over License Fees

As I See It: Isolation

Global IT Spending Barely Ahead of 2008; Some Regions Showing Strength

But Wait, There's More:

Have IT Vendors Been Hit Harder Than IT Departments? . . . CFMUG Downshifts from Monthly to Two Yearly Meetings . . . IBM to Bid for Satyam? Rumors All Over the Place . . . MKS Weathers the Economic Storm in Fiscal Q3 . . . Overworked, Underpaid, and No Free Donuts and Coffee . . .

The Four Hundred

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