Banyan looks to rebound

The networking software maker plans a comeback based on its iron-clad technology.

3 min read
Microsoft is talking about scalability. Novell is hyping tools for the junction of the Internet and internal corporate networks. But lost in the buzz is Banyan Systems (BNYN), the struggling networking software player that can't seem to get out of its funk.

The Westboro, Massachusetts-based firm is certainly not blessed with billion-dollar revenue streams like its more entrenched rivals. Nor does it have mounds of cash tucked away like Novell, a company that also has seen better times. But Banyan is blessed with some iron-clad technology and a loyal user base that includes some of the country's largest networks, two characteristics that might lead to a rebound. Most analysts feel otherwise.

"I think they've got great technology and lousy marketing, and it's really hurt them a lot," said Shilpa Agarwal, an industry analyst at Giga Information Group.

Banyan is beset by financial woes. The company announced plans last month to cut its workforce by 25 percent in the aftermath of a $6.4 million loss for the quarter. Revenues for the quarter were also down to $20 million, compared to $29 million for the same period last year.

In February, the company announced the hiring of a new president and CEO, William P. Ferry, a veteran industry executive who came from Wang Laboratories' fast-growing services division, where he served as president. He made his debut at the company's annual user conference last month in Reno, Nevada, and said his top priority was to resurrect the company from its dire financial straits. Banyan's stock is nearly off the radar screen, trading at around $2 per share.

Executives at the company feel they can heighten Banyan's role in the market by embracing Windows NT, the Microsoft operating system that is being widely adopted in corporate networks. One key component in this strategy is StreetTalk (a directory similar to Novell's Directory Services, or NDS), which has been around longer and has been ported to the NT platform. Banyan representatives claim StreetTalk is far easier to use than NDS and point to success stories like an 80,000-seat network at the United States Marine Corps based on StreetTalk as proof of the product's capabilities.

As for the company's network operating system, Vines, it seems clear that its days as a compelling alternative to NetWare and Windows NT may be over, even though many users "swear by it," according to Agarwal.

"I think there are just a lot of question marks regarding their long-term viability and their ability to embrace the Internet," she said. "They're out of the game in the operating-system market, and they're really hanging their hat on StreetTalk."

Banyan will be busy next month, rolling out StreetTalk 7.5 for Windows NT, a new version of the directory that can be used without a Vines server. The directory offers a central repository for any elements attached to a network. The new release will also offer enhanced Windows-based administration tools and fail-over features for users.

The company will also roll out a product code-named "Yoda" that will allow any user on any machine access to a StreetTalk-based network, which may be most useful in remote settings. Banyan also plans to introduce a tool, code-named WebGuard, that allows administrators to deploy intranet-based content on a selective basis to users.

Both products are obviously intended for Banyan shops that are increasingly migrating elements of their network to Windows NT. New versions of the company's Mail Server and BeyondMail client are also on tap. And the company will continue to enhance its Switchboard directory service, a venture that uses StreetTalk as the back-end for a comprehensive Yellow Pages-style search resource.

Banyan executives expressed hope for the company in light of the upcoming introductions and a revised focus under new leadership. Officials said the company's revenue stream includes several accounts in the midst of multiyear rollouts that should bear fruit in the near future. Executives also highlighted Banyan's large role in more than half of Fortune 500 company networks, according to internal estimates.

"The challenge is going to be not trying to do too much while we stabilize this company's core business," said Eugene Lee, Banyan's vice president of marketing.

Lee said an internal company goal is to post a quarter in the black before the end of the year, a figure he deemed reachable with the new product rollouts scheduled and a reorganization that has shrunk the company's worldwide workforce to about 500.