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May 5, 1994

ASK, INGRES LOOK FATED TO SOLDIER ON ALONE AS TAKEOVER TALK BLOWS AWAY ON THE WIND

By CBR Staff Writer

A few weeks back, there were a number of rumours flowing around about Ingres Corp, the database firm owned by Ask Group Inc. Initially, the whisper was that it had been bought by Computer Associates International Inc. The insatiable Islandia, New York company had been singled out some time before as the company most likely to acquire Ingres. Then, one wag said that the firm was about to be bought by ICL Plc of all people, which also turned out to be false. Now, the firm has been reported in the press as a possible purchase for Microsoft Corp. The first two rumours were no doubt fuelled by the low price of the company’s shares recently. It hit $8.375 a few weeks back (CI No 2,358), which was down from a 12-month high of $28. The Microsoft rumour, which was rife a couple of weeks ago, was probably inspired by the third quarter results of Ask, Ingres’ parent (CI No 2,396). The firm reported losses of $68.9m to the third quarter ended March 31, up from $674,000 last time, and turnover dropped a thudding 14%.

Hacking down

It had to take a restructuring charge of $45m after hacking down staff numbers, while it had to write off another $4.5m in bad debts. This is the sign of a company that has failed to adopt a 1990s business model and which is undergoing extensive surgery to make itself look and feel better. Results like these can make the best of companies look ripe for takeover. When asked about the possibility of being bought, Neil Colling, marketing director for Ask, said that the company’s Electronic Data Systems Corp and Hewlett-Packard Co shareholders would make it difficult for anyone to take over the company. It would seem that the companies concerned are more apathetic about the whole business than Colling imagines, though, and would be glad to get out at the right price. Neither Electronic Data Systems nor Hewlett-Packard wanted to boost up their shareholdings when Ask offered out share options, meaning that their equity investments in the group became diluted. The problems surrouding Ingres are worsening. The company’s sales in North America declined following an awkward approach to marketing there, although the hitches in this area are being rectified at the moment, following the consolidation of its sales and marketing team in the US nine months ago. There were 35 people in the team a couple of years ago and the company has now doubled this to try to get itself back on the map. Even so, the process will take a minimum of two and a half years to produce any tangible result according to Colling, and in the meantime the likes of Sybase Inc are going great guns over there. Figures for 1993 relational database management system sales haven’t been fully analysed by the International Data Corp yet, although analyst Lona Holsen says that Ingres’s market share has slipped. This doesn’t mean that sales have actually fallen – on the contrary, Ingres sales have increased. It’s simply that the likes of Sybase – and Oracle Corp have been selling even more.

By Danny Bradbury

In the UK, Ingres is faring a little better: following its 18% share of the UK market in 1992, the firm is still maintaining a strong UK share after Oracle. It has a large government base and sells mainly to clients that need to use distributed systems. One of Colling’s mistakes is that he doesn’t see Sybase as a threat. In the US, Sybase has already been eating Ingres’s dinner by catching accounts that Ingres has let slip through lack of marketing. Ingres won’t give out sales figures, but the firm’s own opinion of itself in the US says it all, as Collins admits the firm’s mistakes, saying that there was a marketing problem on that side of the Atlantic. Perhaps in the light of all this, Ask has moved to consolidate its services operations and is growing its consultancy force in line with these plans. One good indicator in the disappointing third quarter figures is that hardware sales are down 71% to $3.8m while services rose 6.8% to reach $43.4m, which is a sign that the company is heading in the right direction to increase its margins. Ingres is also

trying to regain its position in the technology field by pumping research and development money into various projects including a Solaris version of various Ask Ingres applications, and the Ingres/Replicator, a database server that can keep information in various locations by replicating it (CI No 2,266). The firm has also signed a deal with Alex Technologies Inc, which will produce a graphical user interface to lend a Windows or Motif look and feel to Ingres character-base applications. This, bolted onto the encouraging 14% research and development figure quoted by Ask, is encouraging, although the company still has a long way to go to catch up to the likes of Sybase and Oracle. Sybase has been shipping enhanced computer-aided software engineering tools in the form of its Momentum family of products, along with its System 10 family of database products. Oracle has shipped Oracle7 with data replication, an object-oriented version of its Co-Operative Development Environment, a workgroup server version of Oracle7, and its media server – all of which helps it to provide a fuller service and to boost its market image. On the manufacturing side, Ask’s proprietary software, called Knowledgebase, and its Unix-based ManMan/X system, are too diverse.

Biceps bulging

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ManMan/X sales are buoyant, but at the moment the company is unable to make a valid contribution to distributed legacy/client-server systems on the manufacturing side. Hooking up the proprietary and Unix-based products is difficult because they are not yet functionally aligned. The company says that it is working on making the systems more compatible, but that this will take time – expect to see Knowledgebase and ManMan/X talking to each other in some fashion next year. For customers wanting to move to client-server now, though, that presents a problem. With client-server set to represent a significant share of the market, Ask should be pumping a little more of that research and development capital into making its own manufacturing products compatible. All these problems led up to the firm’s current financial strife. Its banks are having to negotiate on new loan terms as the company attempts to plough its way back into efficiency, while trying to pick up research and development requirements to revive what is essentially ageing technology. Ask has come to the gym to tone itself up, but its major competitors, biceps bulging, have already been working out for a while. Maybe the company should start sweating for other reasons…

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