License revenue received by Dutch ERP vendor Baan Company NV will start improving in the second half of 1999, though only over the miserable levels recorded in the first six months of the year. That is the cautiously optimistic forecast of CFO Jim Mooney after Baan produced a predictably awful set of second quarter figures. But all the signs are the company is writing off this year and pointing to the potential in 2000 when, it hopes, all its investment in R&D and marketing will start to pay off as companies begin hefty spending on ERP again.
Net loss for the three months to June 30 was $9.1m, down from profit of $17m, on revenue that slid 24.8% to $172.8m. Mid-term figures show a loss of $28.2m, down from profit of $19.2m, on revenue 14.8% down at $348.5m. Baan’s license revenue slumped 58.9% in the quarter to $54.3m and showed a 46.7% decline for the six months to $119.5m. Baan blames this set-back on short-term factors affecting the enterprise applications industry though it does claim that its restructuring program has hit sales productivity.
But compare Baan’s 46.7% decline in license sales with the 3% set-back in software sales recorded by industry leader SAP AG in the same period and the decline in market share becomes apparent. Like SAP, Baan has been making up for flagging software sale with a big push into maintenance and services and revenues here increased by 19.8% to $118.2m in the second quarter.
Baan is also slimming down to reflect the change in its fortunes. Total expenses dipped 34.8% in the quarter to $85.1m. Though the results were in line with market expectations the shares drifted back 2.7% to 12.60 euros on European markets.
