A backlog of unsold products in its reseller channels seems likely to aggravate the heavy losses that Informix expects to report at the end of this month as much as its confessed overemphasis on new software.
The relational database supplier will later this month announce what it calls ?substantial? losses for the first quarter of 1997, bringing to an end the meteoric revenue growth of recent years. In its profit warning, the company cited overemphasis on its new Universal Server database as one of the reasons for its decline.
It made no mention of sell-through problems, but the company?s annual report to the US Securities and Exchange Commission indicates that the reseller community entered the first quarter with a lot of unsold stock from the previous year to shift.
According to the SEC report, Informix generated 50% of its 1996 licence revenue via OEMs and resellers, but that ?the company estimates that almost half of the licences sold to these resellers [ie 25% of the total licence sales] in 1996 were not resold to end users prior to December 31 1996.?
The report warns that this could lead to further problems. ?If these resellers do not commit to licensing the same level of products for resale to end users in future periods, the company?s future revenues could be adversely affected.?
Informix has already indicated that it want all its customers to migrate to the new object-relational Universal Server platform in the short term. This is unlikely to encourage sales of the existing relational products, such as Online Dynamic Server, raising the prospect that Informix may have to write off some percentage of the products value. Even if the resellers can push the unsold inventory through, Informix will see no direct cash benefit.
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