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Sybase forms new divisions

The struggling database vendor announces the formation of four divisions in an effort to boost its sagging profits and recover market share.

Sybase is continuing to reshuffle its deck chairs.

The struggling database vendor announced today the formation of four divisions in an effort to boost its sagging profits and recover market share.

The divisions are based on Sybase's new market focus announced over a year ago to revive the company. They consist of mobile computing, Internet applications, enterprise computing, and business intelligence tools. The mobile computing division was formed earlier this year.

"Our vision is simple: To make the connected economy a reality so that through the effective use of information, our customers can better server their customers," said John Chen, Sybase president and chief executive. "We believe this new structure provides us with a multi-business model that will help drive revenue growth. It provides a clear and disciplined direction for Sybase and our customers through dedicated resources and more focused management. It will enable us to address partnership and customer opportunities in a more-focused, efficient, and fast-moving manner."

But whether the new organizational changes and market focus can return Sybase to its former glory as a major player remains to be seen. While many analysts see the changes as necessary, most of Sybase's stronger competitors are focusing on the same markets, including Oracle, which owns nearly 80 percent of the database market.

"Sybase has been caught in a maelstrom of market transitional effects, and it has not weathered them well," said Marshall Leisten, financial analyst at Dain Rauscher Wessels. "Nevertheless, we are seeing some positive movements. The most recent second quarter showed profitability with essential non-deteriorating revenues."

Leisten also said the company's new positioning and market focus are a positive step toward recovery.

However, he also cautions that Sybase's restructuring and turnaround efforts are in a very early stage and thus raise a red caution flag for investors. Besides the organizational changes, Sybase has reshuffled upper management three times in the past few years.

"The pivotal ingredient for a successful turnaround will require much better marketing and improved execution by new management," said Leisten. "At this stage in the turnaround, it is still too early to give a vote of confidence on either of those ingredients."