Sybase aims to strengthen market position

Losses, layoffs and management restructuring have characterized the last several months at Sybase Inc., but the company hopes to reverse the flow of events with two new initiatives to augment its core database products and a commitment to focus on four core strengths.

Sybase discussed the initiatives at its annual International Sybase User Group conference last week in Washington, D.C., where the company also announced that Marsha Thompson, a former vice president of Oracle Corp.'s government sales group, has been named to steer Sybase's public-sector business.

Thompson joins a recently reorganized management team facing disappointing financial results and bad news emanating from Sybase's Japanese subsidiary.

The company reported a loss of $81 million in the first quarter of this year, including a $51 million restructuring charge. That followed a loss of $55 million in 1997, nearly half of it occurring in the fourth quarter, when auditors discovered the Japanese company used improper accounting methods.

A Return to Profitability

In February, Sybase, Emeryville, Calif., took serious steps to return the company to profitability, laying off 10 percent of its worldwide work force of 6,000 people, reorganizing top management and announcing that it would repurchase up to $25 million in outstanding common stock.

According to Sybase, most of the layoffs were in Japan and did not affect the public-sector group.

Robert Epstein, executive vice president and chief information officer, said while the events do not paint a positive picture, Sybase has a healthy bank balance and no debt and has acquired new business in the first quarter of this year, including customers in Sybase's traditional stronghold of financial services as well as in the public sector.

"There's not a single customer who questions whether we are going to be around for the long term," Epstein said.

To strengthen its market position, Sybase announced Warehouse Studio, an integrated set of existing Sybase products that are designed to reduce the challenge of creating data warehouses from various products.

The integration of Warehouse Studio's pieces will be made possible by a central repository for metadata, which describes the origin of information in a data warehouse. The package will include Sybase's Adaptive Server IQ decision support database; Warehouse Control Center, which also includes Visualizer for metadata browsing; and Sybase Central for administration.

By packaging existing software pieces together and allowing them to share common code, Sybase believes it can reduce installation and implementation headaches related to data warehouses. Due to ship this quarter, Warehouse Studio will run on Microsoft Corp.'s Windows NT and on Unix systems from IBM Corp., Hewlett-Packard Co. and Digital Equipment Corp. Pricing has not been released.

The other initiative announced at the conference is a version of Sybase's Adaptive Server Anywhere database for 3Com Corp.'s Palm Computing family of mobile devices.

The database can be configured to fit in devices with as little as 50K of memory, and Sybase executives said the database will drive a new class of mobile business applications for the pocket-size PCs. Pricing has not been announced for the software, which is slated to ship in the second half of this year.

"What they are attempting to do is leverage strengths they have in several areas," said Carl Olofson, research director in database management systems for International Data Corp.

At the same time, the company is trying to make the packaging cohesive in response to criticism that Sybase's approach has been fragmented, Olofson said.

Sybase executives also detailed four areas in which the company will concentrate its revitalization efforts: development tools, under its Power Studio suite; the new Warehouse Studio of data warehousing-related products; enterprise data management, including its core Adaptive Server Enterprise database; and occasionally connected offerings, such as the different versions of Adaptive Server Anywhere database.

Mitchell Kertzman, who shares the chief executive officer title and duties with Sybase president John Chen, said Sybase has added significant senior managers who have been given a mandate to significantly boost the company's services business.

"Sybase [in the past] was focused on selling technology of databases rather than solving business problems," Kertzman said, conceding that the company has not been as successful as Oracle in selling products for Windows NT, but he said he believes Sybase will catch up.

Using an automobile dealership as a metaphor, Kertzman said that while Oracle has been good at showing customers a car, Sybase has shown them the Parts Department.

"What we need to do is get closer to the company's value set," he said. "I believe it is not an issue of NT; it's at a higher level, selling parts vs. selling solutions."

The company continues to have some successes in the federal market, but it is looking to improve its overall performance in the public sector.

A large portion of Sybase's business with the federal government has been with the Defense Department, particularly in the area of intelligence, said Thompson, who joined Sybase's public sector as a vice president four months ago, replacing John Gugliotta, a contract officer who stepped in as acting vice president for the public sector following the resignation of Patrick Arnone in June 1997.

Sybase also has supplied software to various civilian agencies. "Part of my strategy is to look at market segments," Thompson said, listing education as well as state and local government as potential markets for Sybase.

Thompson named the Census Bureau as another potential area where Sybase products could play a role, and she said Sybase will have no problems maintaining its foothold in Defense intelligence.

Among its customers, the U.S. Postal Service is using Sybase tools to examine sales data from a retail perspective. USPS is in a competitive situation and needs to analyze its sales data as any retailer would, Thompson said.

Sybase products have been implemented under USPS' Point of Service One systems integration contract, held by IBM and NCR Corp., she said.

Struggling for Direction

Analysts who follow Sybase, however, said that despite the company's efforts to turn things around and its first-rate technology, it is struggling for direction.

"They've had two big losses in the last two quarters. This is happening at the same time Oracle has had one bad quarter, then one good one, and Informix has has two good quarters," said Mitch Kramer, an analyst with Patricia Seybold Group in Boston. "In an industry where there is room for profitabilty, Sybase doesn't seem to know how to [become profitable]."

Although analysts said this is not quite a do-or-die year for the company, they did say it is important that Sybase performs and overcomes any worries about its stability.