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Sybase reports another up quarter

The database maker extends its profit streak to four consecutive quarters today as it posts first-quarter income of $5.9 million, or 7 cents a share.

Sybase extended its profit streak to four consecutive quarters today as it posted first-quarter income of $5.9 million, or 7 cents a share.

The database maker handily beat Wall Street's earnings prediction of 1 cent a share as first-quarter revenue inched up slightly from $206.8 million in 1998 to $208.3 million this year.

Before reeling off the consecutive profitable quarters, Sybase had previously lost $81.2 million, or $1.01 a share, in last year's first quarter, and a loss of $55.4 million in fiscal 1997.

"Historically, Q1 has been challenging for us, but we're off to a good start in 1999," said Sybase chief executive John Chen.

Company executives say the reversal of fortunes stems from a restructuring last December when Sybase cut 400 jobs and split the company into four divisions--mobile computing, enterprise computing, business intelligence tools, and Internet applications--to focus on new markets beyond databases.

While profits were higher than expected, Sybase's revenue fell $8.8 million below expectations, said analyst Marshall Leisten, of Dain Rauscher Wessells.

"I like the strategy. They're managing their business well, but they still are not showing growth," Leisten said. "They're talking about a modest next quarter and looking to see an uptake in the [1999] second half. They have to invest in excelling revenue."

Sybase is still transitioning as they work to develop and release new products in each of the various new divisions, he said. "It looks like they're just getting themselves postured well and it takes time."

Overall, first-quarter revenue for database licenses rose 14 percent, from $48.6 million in 1998 to $55.4 million this year, Chen said. But that increase was negated by a downturn in development tools sales, which fell 16 percent, from $30.7 million to $25.7 million.

Chen said the drop in tools revenue was probably caused by developers who held off on their purchases until the new version of the PowerBuilder tool was released. Sybase released PowerBuilder 7.0 this week.

Leisten said Sybase is now on the right track. "The company has done a lot of the right things that should have been done a while ago," he said. "There were a lot of painful decisions that needed to be made. And the previous management mentally knew they had to make drastic changes, but didn't. So when you have someone like John Chen who comes in and doesn't have a history with the company, he's focused on operational profitability."