Informix has announced the final step in a strategic realignment, which will involve the establishment of two independent operating companies.
The first, Informix Software, will focus on providing systems for data warehousing, transaction processing, and e-business applications. The second is a new e-business solutions company focusing on providing database and platform independent software solutions and infrastructure for the e-business marketplace. It will be formally named later.
Both companies will initially be wholly-owned subsidiaries of Informix Corporation, although the eventual goal is to create two independent publicly traded companies. Informix is currently analysing how to separate the capital structure of the two businesses and expects to announce the final details by year end. This will essentially complete the strategic process begun in August.
Informix also announced a senior management reshuffle. Peter Gyenes, president and CEO of Informix, has assumed the position of chairman of the board, replacing Robert Finocchio, Jr., who resigned on 18 September.
The president of Informix Software will be Jim Foy, currently senior vice-president of the database business operation.
Jamie Arnold, vice-president of finance and operations for the Americas, has been appointed chief financial officer of Informix Software and will become chief financial officer of Informix Corporation effective 1 November. He succeeds Yon Yoon Jorden, who has resigned.
Arnold (44) has been with Informix since 1997. He was previously corporate controller of Centura Software. Prior to that he was a senior manager at Price Waterhouse LLP.
Pete Fiore, currently senior vice-president of the Informix solutions business operation, has been appointed president of the new e-business solutions company.
Joanne Protano, formerly corporate controller of Ardent Software which was acquired by Informix in March, has been appointed chief financial officer. Before joining Ardent, Protano (31) was manager in the technology group at Deloitte & Touche LLP.
Informix Corporation has moved its corporate headquarters to Westboro, Massachusetts. The company expects to report an operating loss in Q3 this year; to be approximately break-even in Q4, and return to profitability in the first quarter of 2001
Peter Gyenes said: “It has been our primary goal to bring Informix back into a market leadership position. After in-depth analyses we have concluded that by creating two independent operating companies, we will bring complete focus to bear on every aspect of each business, which address different markets and must satisfy different customer requirements. We believe this sharpened focus on our customers and markets will enhance our ability to provide product innovation, deliver world-class support to our customers and partners, and maximise profitability and shareholder value.”
Informix Software is committed to delivering a single next-generation database engine by progressively integrating the best features of multiple Informix databases. It is also committed to continuing to develop a broad network of partner and ISV relationships to expand the portfolio of applications on its database product line, particularly in high growth markets such as e-commerce and CRM.
The company will be staffed with 2,300 employees – approximately 625 in sales and marketing, 570 consultants and technical support, and 650 in product development. Its headquarters will be in an existing Informix Silicon Valley location.
Informix Software revenues for 2000 are forecast to be $780–800 million, with expected growth of approximately 5% in 2001 driven by anticipated strong increases in sales of e-business database engines. Operating margins in 2001 are expected to reach 20% to 25% excluding transition and restructuring charges.
Meanwhile, the new e-business solutions company will develop a suite of next generation e-business software solutions and infrastructure focused on supporting all leading databases, including those from Oracle, IBM, Microsoft, Sybase and Informix. It will provide a complete, integrated solution which combines web publishing, e-commerce, and business intelligence. These offerings address the growing demand of Global 2000 companies seeking common platforms that integrate e-commerce, content management, and analytic capabilities.
The new company will be headquartered in Westboro, MA, and employ approximately 1,100 employees – 450 in sales and marketing, 240 consultants and technical support, and 310 in product development.
Revenues for 2000 are forecast at $120–130 million. Growth of between 80% and 100% is expected for 2001. The new company expects to reach profitability in 2001, with continued strong revenue and earnings growth in 2002 and beyond.
Informix also announced that a re-evaluation of its business model indicates a current quarterly revenue run rate in the range of $200 million to $215 million, with the newly defined database and solutions businesses accounting for about 85% and 15%, respectively. This is the approximate revenue level it expects to report for the third quarter ending 30 September, and the base upon which future growth expectations should be built.
Based on the revised revenue outlook, the company expects to report an operating loss of $0.05 to $0.08 per diluted share in the third quarter before transition charges and previously announced non-recurring items of $75 million to $90 million. The company expects to be approximately break-even in the fourth quarter of 2000 and return to profitability in the first quarter of 2001, excluding transition and non-recurring charges in both periods.
In addition, Informix said that the additional transition charges expected through the first half of 2001 would range from $15 million to $20 million, slightly higher than the $10 million to $15 million announced on August 9, 2000, primarily as a result of additional staff reductions from establishing the two independent operating companies.
Peter Gyenes, CEO, concluded: “We have reset short-term revenue targets with an emphasis on order visibility and maintaining a conservative approach while we pass through this phase of our operational improvements. Our revenues have been negatively impacted by extraordinary swings in foreign exchange rates and by post Y2K lower demand for legacy applications.
“Although pipelines for our solutions offerings and for our high performance databases are growing, we are clearly under-performing. Most customers tell us our products are great and we see high market demand for the type of offerings we provide.
“We believe the realignment actions announced, along with the impact of the management appointments and focus we put in place several weeks ago, the current ramping up of the many sales and support personnel joining the company earlier this year, and the introduction of new products over the next two quarters in both businesses, position us to execute and reclaim our position as a growth software company providing leadership value to our customers.”