Since he took the helm at wounded database software and application development tools company Sybase Inc in March, Mitchell Kertzman has been busy trying to sell off Sybase’s follies. He feels that between 1993 and 1995, Sybase was attempting to play an ‘anything you can do, I can do better’ game with Oracle Corp, the dominant force in the relational database market. History shows that to be a doomed strategy, says Kertzman, citing the examples of Novell Inc and Borland International Inc versus Microsoft Corp. When Oracle made a big noise about interactive television, Sybase followed suit with a product called InterMedia, which brought little or no payback. When Oracle said messaging software was key, Sybase bought a messaging vendor – and then could not find a way to package the technology with its main offerings. When multimedia was hot, Sybase bought multimedia specialist Gain Technology Inc. The list goes on. One of those follies has now been ditched – in the shape of the Gain Momentum multimedia technology acquired through the Gain purchase four years ago. Sybase has given the product to Triton Services Inc, one of its value-added resellers (CI Nos 3,028, 3,032). This action has been taken largely to stem the research and development expenses and offload the cost of supporting the early customer base. Shedding such products has been a major plank of Kertzman’s cost-cutting program. Following 18 months during which sales of its key product – the SQL Server relational database – have atrophied while rivals Oracle and Informix Software Inc’s database sales have been accelerating at 30% to 50%, Kertzman has been desperately trying to cut costs. His aim is to bring expenses in line with Sybase’s flat or single digit growth rate. Kertzman has been very comfortable with the notion of selling those me-too non-strategic products. But what he has neglected to disclose publicly is that the company is also putting up for sale products that have, to date, been deemed strategic. Since September, the company has been trying to find a buyer for Enterprise SQL Server Manager – ESSM, a sophisticated database and systems management product based on the management framework devised by Tivoli Systems Inc, IBM Corp’s systems management arm. Not only has Sybase previously tagged ESSM as strategic, numerous database user surveys have put advanced systems management capabilities top of their priorities. What is persuading Kertzman to sell some of the key elements of the company as well as the follies is the desperate need to return Sybase to profitability and growth. There is some evidence, albeit slim, that the paring back to core product lines has already had some positive impact. In the company’s third quarter to September 30, revenues grew 7% to $250.2m with software license sales on the rise again – for only the second time in five quarters – albeit by just 1%. Some of that upside was due to a bounce back in European sales after the previous three months, when revenues in the region shrunk by 10% quarter-on-quarter. With expenses also growing by 7%, the company scraped home in the third quarter with an operating profit of just $600,000, notable because it is Sybase’s first positive operating result of 1996. However, excluded from that is a huge $49.2m charge related to a 10% head-count reduction and summer unit closures. Kertzman equates the slender improvement and also Sybase’s better prospects for the future with a back-to-basics focusing of Sybase’s database business on two areas – relational databases – through its SQL Server Unix and Windows NT server product and its SQL Anywhere personal computer database offering; and data warehousing – where its Sybase IQ high-speed data retrieval engine sits alongside Sybase MPP, the massively parallel computer implementation of SQL Server. That database core accounts for two-thirds of Sybase’s revenues – the other third comes from its Powersoft Corp unit which Sybase bought in early 1995 and which is still growing at an estimated 30%. Sybase will continue to pare back costs, says Kertzman. Si
nce the close of 1995, Sybase has burnt its way through $68m of company cash reserves, leaving $156m in hand. There are no plans on the scale of the July lay- offs, says Kertzman. But other segments of the business that have been termed strategic – middleware is the obvious candidate – may follow in Sybase’s pursuit of a revival.
