Macro 4 Plc’s chairman Terry Kelly remains cautious about predictions for the future prosperity of the software products developer, which still relies on IBM mainframe sales for 96% of its turnover. With businesses continuing to move from mainframes to a multitude of mid-range alternatives, Macro has seen new mainframe product sales balanced by cancellations. Growth is mainly from its relativley new and small mid-range AS/400 business, and this is reflected in the company’s year-end results, with net profits showing only a very slight, 0.01% increase to ú7.8m on turnover up 2.7% at ú25m. Macro 4 produces a range of system software products that it says enhance or plug holes in IBM’s VSE, VM and MVS operating systems. Kelly admits that cancellation rates for mainframe products are considerably higher than two or three years ago. However, he says the company is unique now in that it rents rather than sells its software, often on an annually renewable contract, and therefore, he believes, is more vulnerable to cancellation than companies which sell software with only relatively small annual maintenance contracts. On the other hand, a large percentage of Macro’s turnover is from on-going rental business. While some mainframe defectors move to AS/400, many are moving to client-server technology under Unix, Kelly said, and these are straight losses to Macro. It is little wonder that with so much of the business dependent on the mainframe market, the company does not feel it can accurately predict growth in the coming year. The picture is rosier in the mid-range AS/400 arena, where Macro has grown both its customer base and turnover by 100% in the past year, it says. The company currently has six products for the OS/400 operating system, against some 33 mainframe off erings, and two more are on the way by the end of the year. While Macro develops all its own mainframe products, it has bought in its AS/400 range from two small UK development companies, paying what it describes as a small capital sum plus on-going royalties to the companies. Kelly says he is quietly confident about the future growth potential of the mid-range market, but is keen to stress that the company remains absolutely committed to its mainframe business, and continues to launch new mainframe products. Nevertheless, it looks as if the best it can hope for is that this business remains stable. With only 4% of turnover coming from mid-range products at present, the company may need to look elsewhere for the future. Kelly says of course Macro is constantly looking at new opportunities, and while it will not be announcing a range of Unix products just yet, it would not be totally out of the question for the future.
