Sequent Computer Systems Inc, on its way to being acquired by IBM Corp, last night reported a surprise net loss of $16.5m, or $0.39 a share, compared with a $58.7m loss last time, on revenue which declined to $143.5m from $185.6m. Analysts had been predicting earnings of $0.05 a share.
Chief financial officer Bob Gregg blamed the losses directly on confusion among customers, partners and the Sequent sales force caused by early press reports of the company’s pending merger with IBM. Many customers, including several with large projects, postponed planned purchases, said Gregg, who claimed to have identified over $50m in forecasted transactions that did not close as a consequence of rumors and news stories that circulated during the last three critical weeks of the quarter.
Gregg said he believed this business was deferred, rather than lost, and claimed that customer reaction following the announcement had been overwhelmingly positive. John McAdam, Sequent’s president and chief operating officer, said it had become increasingly difficult for Sequent, as a small company, to maintain the support of software vendors and to win new business, even among its installed base.
Sequent’s work with IBM on the Project Monteray 64-bit Unix effort, and its subsequent negotiations with IBM to resell its Merced-based multi-processor servers, had been aimed specifically at raising awareness of Sequent and providing a migration path to 64-bit, said McAdam. These efforts led to the realization that there is the potential for enormous synergy between Sequent and IBM that could be realized by combining the two companies he said.
But until the merger is completed, said McAdam, Sequent will focus on its current business opportunities, and says it continues to be cautious about the company’s near-term prospects.
