Tech Industry

Can Borland survive?

Borland International's announcement to sell off its Paradox desktop database to Corel has Borland watchers wondering if the paring of products will make Borland competitively lean-and-mean--or ready for a quick sale to a willing buyer.

Borland International's (BORL) announcement today that it is selling off its Paradox desktop database to Corel has observers wondering if the paring of products will make Borland competitively lean and mean--or ready for a quick sale to a willing buyer.

The decision to hand Paradox to Corel is consistent with Borland's stated plan to shed its consumer-oriented desktop applications in favor of a strategy of products and services catering to software developers. Since Corel already licensed Paradox for its Corel Office Professional suite of applications, it seems odd that it didn't happen sooner. (See "Borland unloads Paradox")

But, with the expected announcement of a second quarter loss of roughly $11 million, and the layoff of 15 percent of Borland's work force, analysts say the move does little to stabilize the company or ensure its survival. Sources close to the company say that even the Borland sales force is finding that just being Borland is an impediment as customers are nervous about investing in what may be a dead duck.

"These may be the darkest of days for Borland," said Jean Orr, senior analyst at brokerage house A.G. Edwards. "But Borland has a strong following and I wouldn't turn out the lights just yet."

The litany of Borland's troubles is long. The company has been struggling for the past two years, through a series of product downturns, management shakeups, and financial disappointments.

Last week alone, Borland disclosed the expected loss, and the company lost a coveted contract to supply Netscape Communications with a just-in-time Java compiler. Netscape instead went with Symantec's just-in-time compiler. The company also lost Anders Hejlsberg, the star developer of Borland's Delphi development tool, its most successful product in years.

Last month, Paul Gross, senior vice president of research and development, announced his departure to join Borland's archrival Microsoft. Gross had long served as one of the company's most vocal and credible cheerleaders, and his departure was seen by many as tacit confirmation that Borland's days are numbered.

Chief financial officer David Mullen jumped ship in August. CEO Gary Wetsel, hired to replace company founder Philippe Kahn and to turn the software maker around, threw in the towel this summer.

Even the company's one moderate success--Delphi--is beginning to lose its luster. The tool won rave reviews and brisk sales when it was introduced nearly two years ago. But Microsoft's Visual Basic and Powersoft's PowerBuilder continue to dominate the market for corporate development tools.

A planned merger with Open Environment, originally expected to add much-needed three-tier development capabilities to Delphi, isn't expected to boost the tool's appeal, or at least not enough. The merger at best will give Borland wider product distribution, Orr said.

And a planned Java-based development tool, code-named Latte, may debut too late in a too-crowded market to capture a significant share, said Don DePalma, an analyst at Forrester Research.

This series of events is the writing on the wall for most analysts.

"They look like a breakup candidate," DePalma said. "They really have to pull a rabbit--or a succession of rabbits--out of their hat to hold it together."