Baan beats Street estimates
The Baan Company beat Wall Street's profit predictions of 11 cents a share, posting profits instead of 13 cents per share, or $26.9 million.
The results do not include the Dutch firm's one-time $14.4 million expense from the May acquisition of the Coda Group, a British maker of financial management software. Baan is most known for its manufacturing management software and has traditionally been weak in the financial software market.
Not including the purchase, growth was up nearly 63 percent from last year's like quarter profits of $16.9 million or 8 cents a share. However, including the acquisition charges, the firm had nearly stagnate growth with profits of $17.1 million or 8 cents per share.
Revenue for the period grew 46 percent from last year's like period to $230 million from $157 million. Of this, license revenue in the quarter reached $131.3 million, up 31 percent from 1997 figures. The lucrative maintenance and service revenue stream increased 73 percent to $98.8 million during the quarter. Direct sales accounted for $98.6 million of this compared to $75.2 million in last year's period. Indirect sales, or sales to resellers, were $32.7 million compared to $24.9 million last year.
Baan came under fire from Wall Street for its reseller system because the Baan family owned a large portion of a venture capital firm that owned several resellers. Profits from the Baan Company's software sales were also being used to finance the company. So Baan founders Jan and Paul Baan announced last month they were taking steps to separate the two companies.
Those steps included the announcement this week that Paul Baan was stepping down from the Baan Company's board of directors to run Vanenburg Ventures, the investment organization, and that Jan Baan was stepping out of the day-to-day operations of the Baan Company to run the family's charitable organization full time. Also the Baan Company on January 1, changed how it reports reseller income. Now, Baan only reports income from sales to resellers when the resellers have sold the product to actual customers.
Baan during the quarter also moved much of its corporate operations to Reston, Virginia. Analysts said the move was designed to make the firm even more of a North America-based company because that is where the majority of the market is located as is the new management team including new chief executive and president Tom Tinsley. Baan now has dual headquarters in Reston and Barneveld, The Netherlands.
Nearly 40 percent of Baan's income came from sales in North America. Europe, the Middle East, and Africa accounted for 53 percent; Latin America and Asia Pacific were 7 percent. The company did say that sales in Asia declined during the quarter due to the Asian economic troubles but did not "materially affect the company results."