Computer Associates said it had sorted out most of the problems that dragged down its European results last quarter, helping it to a 28 per cent increase in fourth quarter and year end net income. It also plans a major channel reorganisation in the region to ensure continued growth.
The preliminary figures, which will be confirmed after the software giant's year end audit, show a 15 per cent increase in annual turnover to just over $4 billion, with net income up 28 per cent to $2.54 per share. For the quarter, earnings rose by the same amount to 90 cents per share on revenues of $1.2 billion.
Weak performance in Europe dragged performance down in CA's third quarter, but chief operating officer Sanjay Kumar told 'VNU Newswire' that "significant efforts" had been made to turn the market around. Organisational changes and new training programmes for salespeople had helped make the region more focused on the client/server product line, which now accounts for 40 per cent of corporate revenues.
To maintain the trend, the chief priority will be the channel in the coming six months. The company has relocated one of its top US channel executives, Mark Marron, to the UK to build a pan-European reseller business for Unicenter, the flagship system management line. Kumar said the target is to increase sales via resellers from the current European level of under seven per cent to 12 per cent by the end of this year, and 20 per cent next. This is still a lower percentage than in the US, where one-third of system management products go through the channel.
"We are looking for mid to high end integrators and value added resellers, although it's too complex a product for a pure PC reseller," he added.
Commenting on the start of the European turnaround, Kumar said the company had been helped by the NT boom. "We placed far more management attention on the client/server line in Europe," he explained. "We were helped by a significant acceleration of client/server adoption in Europe. Although the region is traditionally 12-18 months behind the US, that gap is narrowing rapidly. The main driver for that has been NT."
He admitted CA had to "work hard" to get its managers and sales teams fully focused on the new technologies, such as the Unicenter TNG system management flagship. "We had to put in great efforts to get the salespeople better equipped to demonstrate client/server, and this has paid off well," he said. "We have also improved pipeline management and made some organisational changes. It has been important to get more focused and to create a management process suitable for the very complex world of client/server, which involves products from many vendors."
Kumar claimed the recent crises affecting database rival Informix had had no tangible effect on CA's Ingres business and claimed the product was "holding quite well" with Ingres 2.0 in test. However, he was cagey about future database strategies and how Ingres would be sold alongside the Fujitsu object product, Jasmine, that CA will offer. The company seemed keen to concentrate on Unicenter TNG as the star of the quarter - it yielded $440 million in revenue - and to play down the more confused database side of the business.
The results were damaged by the strong US dollar, which slashed $35 million from total revenues. Audited results should be reported at the end of May.
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