Sybase became the latest database company to see its share price go into meltdown as it faces up to a possible fourth quarter loss at the end of this month.
The database company?s share price hit a six year low of $8.88 when it announced that unexpectedly weak sales in the US meant that fourth quarter revenues on 21 January will fall short of expectations. It also admitted that there was a chance that it will report a loss for the quarter.
Sybase said it expects to report results ranging from a loss of 7 cents a share to a profit of 2 cents a share on revenue of $245 million to $250 million. Wall Street had expected profits of around 13 cents a share.
Mitchell Kertzman, Sybase chief executive, admitted that the company had not done well in its domestic US market. ``We have probably been not spending enough time looking for new customers in North America,'' he said. The fourth quarter is traditionally the strongest for database sales for the company.
Sybase is the latest firm in the once buoyant relational database market to face financial problems in recent months. Arch rival Oracle saw its share price crash last month when it also failed to meet Wall Street predictions, while Informix was forced to admit to inaccurate revenue recognition dating back three years.
Oracle?s pre-Christmas share price crisis was fuelled by the currency crisis in Asia. At the time Kertzman said that Sybase had avoided this problem, but on Friday said that the company was now demanding payments in cash from customers in four Asian countries - Thailand, Malaysia, Korea, and the Philippines - because of the currency crisis. Sybase takes ten percent of its revenues from Asia, excluding Japan.
The profit warning caused concern among investors about the extent to which Sybase has restored its fortunes following a product and technology-driven financial crisis over the past two years. This will be the fourth consecutive quarter in which year on year revenues will drop.
One Sybase shareholder complained: ?What a way to start a new year! I lost quite a bit of money on this stock. I would never in my life thought this stock would hit $9.00. Didn't Kertzman say the company would be turned around by end of 1997??
Another investor questioned the lack of detail in the public announcement about the problems faced by the company. ?Considering the range of possibilities, I wonder just how firm a grasp on numbers management has,? he said. ?Not all of the numbers are in and there is a great deal of time before official earnings. Still there must be enough uncertainty in the forcast based on known numbers to warrant this statement.?
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