Sybase CEO: Back to growth

As Sybase continues to search for a profitable niche, it surprises Wall Street by posting a slight profit.

Mike Ricciuti Staff writer, CNET News
Mike Ricciuti joined CNET in 1996. He is now CNET News' Boston-based executive editor and east coast bureau chief, serving as department editor for business technology and software covered by CNET News, Reviews, and Download.com. E-mail Mike.
Mike Ricciuti
2 min read
Sybase surprised Wall Street today, posting a slight profit, as opposed to a loss.

The data management company posted second-quarter profits of $450,000, or 1 cent per share, compared to a net loss of $17.8 million or 23 cents per share in the same year-ago period. Last quarter, the company lost more than $81 million, or $1.01 per share, sequentially.

The financial results soundly beat analysts' expectations that the company would post a loss of 9 cents a share, according to First Call.

Sybase's revenues were up slightly at $217.8 million for the quarter, compared with revenues of $215.5 million a year ago. First-quarter 1998 revenues were $206.8 million.

"Today's reported results reflect the progress we believe Sybase has made in its return to growth and profitability," said John Chen, the company's president and chief executive, in a statement.

The surprising financial performance comes as Sybase continues to search for a profitable niche to shore up its business. The company's core database server business has slowed drastically, and executives are hunting for fertile territory.

One such area may be in providing middleware and application development tools.

Revenues from its licensing fees fell slightly to $105.9 million for the quarter, down from $110.6 million a year ago. But revenues from services rose to $112 million from $104.9 million the previous year.

Yesterday, Sybase announced a deal with Intuit to license its Financial Server software and Jaguar CTS application server.

Financial Server is a database server designed specifically for banks, insurers, and capital markets, designed to handle such financial operations as Internet banking, securities trade processing, and agent automation functions.

Next month, the company will lay out a plan to revamp its PowerBuilder development tool and simplify its cluttered application server product line.

Analysts warn that while PowerBuilder remains popular with Sybase's installed base, the company may see its share of the market erode as a handful of new, more Web-savvy tool makers enter the market.

While the database business remains weak for Sybase and competitors Oracle and Informix Software, the company does see a growing market for its mobile and embedded database software.

Sybase management has stated that mobile computing is one of three areas on which the struggling company will focus in coming months.

In May, executives announced a new set of tools for building data warehouses and new small "fingerprint" mobile database software for 3Com's PalmPilot handheld PC.

The company also continues to focus on data warehousing and Web computing. Sybase plans to add professional services personnel in an effort to increase its revenue derived from consulting.

Sybase gained in post-session trade, moving up to 9-5/8 from the the regular session close of 9.