Centura Software Corp. (Nasdaq: CNTR) said Thursday that 3Com Corp. (Nasdaq: COMS) will use its database manager, RDM/Vx, in its LAN communications system.
CEO Scott Broomfield said the deal is a sign that Centura, at the tail-end of a transition from a client server business into wireless connectivity, is making headway in the exploding wireless enterprise space.
3Com will embed RDM/Vx, designed specifically for mobile computing, into the NBX 100 Communications System, which provides customers with connectivity over a single voice and data network.
Shares in the company closed at 4.44 Wednesday, up 11 percent for the day. The stock gained ground after the company announced $100 million in equity financing from institutional investor Majjes Limited, and a deal with Handango, Inc., which will provide mobile devices, network connectivity and software distribution for Centura's mobile application server.
"Its a nice financial win, in the few $100,000 range," Broomfield said of the 3Com deal in a telephone interview. "It's a deployment based contract, I can't disclose the unit price," he added. It's also "another validation point," for the company's technology, like the deals Centura signed with AOL (NYSE: AOL), Hewlett-Packard (NYSE: HWP) and Hughes Electronics (NYSE: GMH), Broomfield said.
"The markets have been talking voraciously about wireless, but people aren't paying attention to half of it." They've only taken note of the PDA side of it, but there's another massive market in the enterprise side of the business, Broomfield said.
"The markets are nascent with respect to enterprise connectivity -- all the talk is about consumer connectivity.... there are no 800-pound gorillas in this space, yet," Broomfield added. Of the wireless market, enterprise systems amount to about 5 percent of this year's market, but the number will grow to 50 percent by 2003, according to data from Meta Group.
"It was a competitive bid, we came up as the winner, because we have the most robust technology," Broomfield said. Sybase (Nasdaq: SYBS) and a couple of private companies offer similar technology.
The deal doesn't change Centura's outlook for the quarter. Currently the company is getting 75 to 80 percent of its revenue from its client server business, and only 20 to 25 percent in wireless. Broomfield said the company expects to break even in the fourth quarter, and see results slightly negative to break-even next year.
In comparison to competitors Allaire Corp. (Nasdaq: ALLR), Aether (Nasdaq: ATHR), SilverStream Software Inc (Nasdaq: SSSW), Puma Technology Inc. (Nasdaq: PUMA), Broomfield said the company is undervalued. Puma is trading at 30 times revenue, while Centura is trading at only 4 to 5 times revenue; SilverStream and Allaire are rivals on the application development side, but aren't competing in the mobile and back-end aspects of business.
Broomfield said the company is undervalued because management problems had left the company in a "horrific" state before he joined. The company's stock had dropped from $30 to 80 cents, it hadn't released products in years, it owed millions of dollars and had lost all of its analyst coverage, which it has yet to regain.
"If we were a start-up, it would be a different story, but that's okay," said Broomfield, who added that Morgan Stanley and Hambrecht & Quist are interested, but still in a "wait and see mode" before initiating coverage. "It takes a long time to get people to believe... that's what I do."