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Sybase struggles for direction

In his departure from Sybase, Mitchell Kertzman leaves behind a struggling company that is trying to define its role beyond databases.

    In his departure from Sybase, Mitchell Kertzman leaves behind a struggling company that is trying to define its role beyond the database market with a new leader at its helm.

    While playing down any chances of spinning out some of the companies wide-flung entities, newly appointed chairman John Chen told CNET News.com that such a move is not out of the question if that is what's necessary to bring focus to the company and the best return for its shareholders.

    Most analysts agree that Sybase's biggest challenges will be to focus its different units, from mobile computing to enterprise databases, into a cohesive strategy which may help the company kick-start its sagging growth. As the database market has fallen on hard times, the company has been trying to carve a profitable new niche for itself.

    "[Sybase has] tried over the past year to present a rational view of the company that is mutually supportive," said Carl Olofson, an analyst at the research firm International Data Corporation. "But for one reason or another, they have been not been successful at doing that in terms of public perception."

    In September, the company announced that it was forming a mobile computing division. But analysts have expressed doubt over whether the company will see any benefits from the move.

    "They have a growing mobile computing business, but the question remains: What are they going to do with all the other areas they are interested in?" asked Julie Tlyman, an analyst at Merrill Lynch. "It's kind of obvious that they haven't been able to generate new revenue growth in that area."

    Chen, also the company CEO and president, concedes that Sybase has been slow previously in defining itself but says that he has a strong blueprint to lead the it back to strong growth.

    "In the past, we were unable to separate our four or five different businesses, but I plan on separating them aggressively and building accountability into each," Chen said. "The No. 1 thing we need to do now is to focus on the market and growth of the business."

    Chen did not specify his plans but says he has some moves up his sleeve. He will embark on a road show next month before analysts and the media to trump up support for his strategies.

    Although there are no current plans to spin off any of the company's units, Chen added that he is not beyond taking more drastic steps to improve the company's financial health.

    "Right now I have a blueprint that allows me to run the company as a coherent family but yet with different focuses of the business," Chen said. "But for market reasons, or execution reasons, if that doesn't return the best shareholder value, I will do whatever is necessary...If spin-offs will boost the next level of growth, I will consider it."

    Shares of Sybase rose 12.5 percent to 6.75 today, and have traded as high as 17.5 and as low as 4.5 during the past 52 weeks.

    Analysts added that another challenge the company faces is to attract new users beyond its traditional customer base.

    "Although the market in general is slowing for this sector, Sybase is having a bit of an issue getting new customers," Tlyman said. "Generating new customers is going to be so difficult that cross-selling their other products to their installed base might be the best move going forward right now for them."

    But analysts agree that the bigger question, which will ultimately shape how its customers and Wall Street view the company, is Chen's strategy to keep the company intact--or not.