By Charles Cooper
Special to CNET News.com
July 23, 2001, 12:00 p.m. PT
When Dale Fuller makes the rounds at Borland's annual BorCon conference this week, the company's chief executive will have ample reason for celebration.
With Borland posting its fifth consecutive profitable quarter--second-quarter pro forma earnings soared 60 percent to $6.4 million on a 20 percent increase in sales to $56 million--Fuller oversees operations at one of the few feel-good stories in the computer industry's prolonged winter of discontent.
It wasn't always so.
Borland, a former highflier founded at the dawn of the PC era by Phillipe Kahn, had fallen on hard times. After getting involved in a disastrous competition with Microsoft in the early 1990s, the company bore little resemblance to the self-styled "barbarian" image popular during the company's heyday, when it controlled 50 percent of the then-$600 million database-management software market, and its stock traded at nearly $90 per share.
After Kahn's departure in 1994, five chief executives tried but were unable to stem customer defections or the departures of key staffers, such as Brad Silverberg, Paul Gross and Anders Hejlsberg (all, coincidentally, plucked by Microsoft).
Against the backdrop of mounting red ink, investors and industry watchers wrote off Borland as yet another spectacular flameout. But since coming onboard in spring 1999, Fuller has focused the company on Java development in the enterprise, embedded-relational databases and RAD toolsets for client-server and distributed computing.
The formula has helped pull Borland back from the brink. And Wall Street has noticed: Shares in Borland are trading around $15, up sharply from their 52-week low of $4.15.
Fuller discussed the company's direction in a recent interview before the start of the BorCon developer conference.
Q: I can actually remember back when Borland was considered to be a hot software company. Are you guys hot again?
When you say Microsoft, you're alluding to the defections of people like Brad Silverberg, Paul Gross And Anders Hejlsberg?
What was the impact of the Internet on Borland?
Has Microsoft they left you alone?
No one leaves us alone. I think the key is to build an environment where people make a difference and their products make a difference. And then they won't leave.
You were able to hit your target numbers in what was a very tough environment. What was particular about your segment of the market that made for good news rather than disappointing news?
Is there anything of note about demand for products like yours having to do enterprise software projects that's different from, say, demand for optical fiber or e-commerce or PCs and servers?
A lot of companies are reluctant to project future sales and earnings, but Borland announced it expects a 20 to 25 percent sales jump in the third quarter from a year ago--and 83 to 85 percent gross margins. Considering how dicey things still are in the industry, aren't you sticking your necks out a bit?
Is that because you expect to see the Fed's rate cuts kick in, or is it particular to your niche in the industry?
OK, but Borland's had operating losses in three of the past four fiscal years. Do you feel confident about the company's ability to remain consistently in the black from here on in?
What's the biggest threat to upset that focus, then, and to derail the company's progress?
What sorts of products or technologies does Borland want to fill out its line?
We talk to people like Bank America. They're talking about hundreds of millions of dollars each month if they can get products out sooner. There's a whole host of things that we're looking at in wireless, mobile, the Java application space--those types of things that are absolutely revolutionary for the market.
Was the scuttling of the proposed merger with Corel the best thing that never happened to the company?
When you arrived, did you believe back then that Borland--or Inprise, as it was then called--would be able to survive as an independent entity?
Yeah, but lots of people were giving up on Borland ever making it back.
Looking back, what do you believe marked the turning point in the company's fortunes?
I called myself the gas house, because I was constantly filling up people with gas. And that's because the company had been downtrodden for nine years. The company was dying. When I took over, the stock was $2.95. It was incredible. The real defining moment was our first worldwide, all-hands meeting when I set down the charge that we were focusing everything on the Net. And I used term "Nothing but Net." And that's what we've been executing to.
You paint an upbeat picture, but again, as far as watching the horizon, whom do you see as your most dangerous competitor?
Let me ask you about a managerial question that's received a lot of ink of late--that of CEO compensation. The criticism is that the pay and option scale between top management and the rank and file is out of whack. You've personally received a couple of million options in the past two years. The stock's up from a 52-week low of around $4 to around $15. Still, that's a lot of shares. Are you worth it?
OK, with the exception of questions like that one, I assume you're enjoying yourself? Is there anything about the job that you didn't expect when you took it on after coming from retirement?