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Hyperion posts net loss

Struggling with its sales strategy under a recent merger, Hyperion Solutions this week posted a six-month net loss of $1.3 million, or 4 cents per share.

Struggling with its sales strategy under a recent merger, Hyperion Solutions this week posted a six-month net loss of $1.3 million, or 4 cents per share.

The Sunnyvale, California-based firm, which makes business software used for reporting, analysis, modeling and planning, reported net income of $8.6 million on revenues of $106.9 million for its second quarter ended Dec. 31. That compares to $6.5 million in net income on $87.2 million in revenue for the same period in the prior year. Earnings per share rose to 28 cents per share from 21 cents for the same period last year.

However, the company, clobbered by a $21.8 million charge reported in the September quarter for its merger with Arbor Software, posted an overall six-month loss of $1.3 million. Without it, the company would have posted net income of $17.4 million for the quarter.

Hyperion has been struggling to get its sales back on track since it merged last year with Arbor Software and had warned investors of the loss, which was reported yesterday. The company said it expects sales to continue declining in the next quarter while it revamps its strategy and melds the two companies strengths.

While Arbor was an online analytical processing (OLAP) software maker, Hyperion was a financial applications vendor with close partnerships with other applications firms, most notably Baan. Hyperion and Arbor said last month that they had finished merging their product lines, though analysts say they they still have work to do.

"You've got issues in terms of aligning the sales force so they can present applications and the server tools," said Henry Morris, analyst at International Data Corporation in Framingham, Massachusetts. "That takes some time to set up but the markets they are in are high growth."

Morris said the market for OLAP tools has been growing year to year at 30 percent, while the financial applications market is expected to increase 20 percent annually. OLAP applications take transactional and other departmental data stored in ERP systems and turn it into information that can be used to gauge such executive level issues as profitability of a venture, worth of corporate assets, and performance of a particular product line. With the information, managers can make quick changes to the business to meet market demands.

Over the past year, Hyperion Software, which has more than 1,800 employees, has delivered new products including the Hyperion Integration Server, Hyperion Web Gateway 2.0, and Hyperion Pillar 4.0, and announced a reseller partnership for Hyperion Pillar with Lawson.

"If they can get over these consolidation issues and get a management team together in the short-term these are markets that will grow overall," Morris said.