The Santa Cruz Operation (SCO) beat analysts? expectations for its first fiscal quarter due to improved efficiencies following its reorganisation last year.
At the time, the firm centralised its sales and marketing teams to focus on certain horizontal and vertical markets, rejigged its management team, and took a $60 million hit in its third quarter to write off channel inventory and introduce a new electronic licensing system (see VNU Newswire, 21 August, 1998).
As a result, for its first quarter, which ended on 31 December, 1998, SCO saw revenues increase by 11 per cent to $52.7 million. Earnings rose to $3.1 million or $0.09 per share compared with profits of $424,000 or $0.01 in the year ago quarter. Analysts had expected earnings per share of $0.05.
Doug Michels, SCO?s president and chief executive, said: "They were very positive results and a real validation that the actions we took to change the business six to nine months ago have paid off. Our initiatives are working - we?re still fine-tuning things, but our progress is bourne out by our results and things are running smoothly. We?re on track for future growth."
He continued that sales had been boosted by a "strong increase" in demand for its Unixware 7 operating system (OS) and ecommerce products.
But while the firm?s Tarantella middleware was still not contributing to revenues in a major way, he expected that the demand generation work SCO had been doing in recent months would provide "a very nice backlog for our future business," probably during the course of this fiscal year.
Michels added that he also hoped to see significant sales from the work the company was doing with IBM by the second half of this calendar year. The project, codenamed Monterey, will result in the two vendors merging their Unix Oss into one 64bit implementation, and Sequent has just committed to adopt the offering by the fourth quarter of this year (see separate story).
"Our fourth fiscal quarter or first next year is when we?ll see the impact [of the Monterey project], a noticeable impact. We may see some in the third quarter, but I don?t want to underestimate the challenge of engaging a huge machine like IBM," Michels said.
He added that, while the First Call analysts? consensus expected the firm to generate revenues of $207 million, on earnings of $0.35 per share, for its full fiscal 1999 year, he now believed that "we?ll add $0.05 this year".
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