Banyan Systems Inc announced Wednesday that it is pulling out of the software business to focus all its resources on its services division and its internet start-up, Switchboard. Banyan plans to file an IPO of its majority owned internet subsidiary within the next fifteen days.
The company has also reported a third-quarter net loss of $985,000, or $0.04 per share, compared with net income of $681,000, or $0.03 per share, for the same period in 1998. Revenues for the third quarter were $19.0m, compared with $18.9m for the same period last year.
Scott Silk, senior VP of business development said: Exiting the software business is another milestone in our progress towards refocusing the company into a services organization. He added that Banyan will continue to service its installed base of customers on its StreetTalk, Vines and BeyondMail systems but there will be no more enhancements to these products. This leaves a services business worth $40m worldwide and growing at 65% a year according to Silk, and Switchboard, soon to go through an IPO. The company estimates that it will record an after-tax loss from disposal of roughly $4-$5m in the fourth quarter to account for the unrealistic value of certain software assets, excess facilities and a cut in staff of 45.
Banyan has over $100m in cash and with the funds it raises from the Switchboard IPO, it plans to start acquiring other services companies. We have the infrastructure and directory business but we need e-business application development to give us front and back office positioning, he said. Silk was in New York yesterday meeting potential companies that Banyan might acquire but was unable to give any more details. The company hopes to be able to announce more on this by early next year.
