Tech Industry

Sybase on the verge of a shakeup

As Sybase gears up for a management shakeup, its top executive lays out plans for the company?s road to recovery.

As Sybase (SYBS) gears up for a management shakeup, its top executive today laid out plans for the company?s road to recovery.

Sybase's first move, expected to take place Thursday, will be to name some new executives, said chairman and chief executive Mitchell Kertzman, who did not elaborate further on the matter at today's BancAmerica Robertson Stephens investment conference.

Kertzman said the company's recent acquisition of Intellidex, a maker of tools for managing data stored in a data warehouse, provided Sybase with both strong technology and strong executives.

The CEO named three focus areas Sybase will target in 1998, including the data warehouse market, mobile and embedded database technology, and Web- and Internet-based computing.

"Our job in 1998 is twofold," he said. "We have to focus our resources on these market opportunities and drive relentlessly on field operations to get more customers."

The road map Kertzman laid out and the upcoming executive announcements come on the heels of yesterday?s announcement that Sybase would exact layoffs in an effort to streamline operations. About 600 people will be laid off, leaving about 5,100 employees, Kertzman said, adding that the company wants to reduce its expense run-rate by $100 million and return to break-even, or possibly profitability, by the second quarter.

"We have done what we needed to do to stabilize the company," Kertzman said.

Analysts said that now it is time for Sybase to listen to its customers, whose primary complaint is that they have been frustrated with fragmentation in the market and want a more complete solutions provider.

The Intellidex acquisition is a step toward becoming a more complete solutions provider, analysts have said. The deal is expected to bolster the company?s presence in the solutions space, one of the few that is growing and producing high profits for database software makers.

In the area of mobile and embedded databases, technology that allows portable computers and devices to synchronize information with a server, the company already is pursuing technology for personal digital assistants, automobiles, and cell phones.

"We are producing the first fingerprint database to go into those devices," Kertzman said.

Another opportunity Sybase intents to pursue is Web- or Internet-based computing, an area that Kertzman called a natural extension of client/server or development tools for the application environment.

"Sybase committed many sins and errors and missteps," Kertzman said, acknowledging past mistakes. "In order to maintain a high rate of growth, [database companies often] rely on mega-deals, multiyear deals. But after some period of time, you end up saturating your own customer base, while customers consume what you sold them."

"You only hope that [this year] turns out as good as he says it will," said Sarah Ferrell, an analyst for Bank of America?s high-technology group. "They have addressed the issues that hurt them last year, and that is a step toward recovery." New executives also will be a positive step in the right direction, she said.

In addition to laying out product development areas, Sybase needs to build up a base of new customers in 1998. In working toward that goal, the company is going to implement a new account sales force, because "that is the future of our ability to grow the business," Kertzman said.

One challenge facing Sybase--as well as other technology companies--is the trend of businesses shifting IT budgets away from new products and upgrades and toward their efforts to fix the Year 2000 problem. Kertzman said some customers are diverting as much as 20 percent to 25 percent of their IT budgets to year 2000 issues.

"When you take 20 to 25 percent out of IT budgets, you have effectively taken the growth out of the enterprise infrastructure market," he said.

Ivan Mulcahy, managing director at Cognotec Services, said that Sybase should have reacted sooner in changing management and identifying year 2000 issues.

(Kertzman is a board member of CNET: The Computer Network.)