The problems of the ailing ERP sector has claimed another victim after Hemel Hempstead, UK-based software and IT services company MDIS Group effectively put a ‘for sale’ sign over its holding in Glovia International LLC, a Los Angeles, California business which specializes in ERP systems for technology companies.
The most obvious buyer for the business is Fujitsu Ltd, which owns a 30.5% shareholding in Glovia. Fujitsu has a strong commitment to the product as it is installed at its factories in Thailand, Philippines, China, Korea and Vietnam.
While Glovia claimed a famous scalp when in 1998 Dell Computer Corp ditched an installation from SAP AG in favor of Glovia, the downturn in the ERP sector has plunged the operation into the red. In a profits warning issued yesterday, the MDIS board says Glovia’s operating results for the first half will fall substantially short of the board’s expectations. Glovia provided 34m pounds ($52.9m) of group revenue last year.
MDIS is also likely to dispose of its PRO IV applications development tools business after it too was expected to report revenues significantly below expectations. PRO IV is a fourth-generation multi-platform rapid application development tool and it was hit after Mercedes Benz abandoned a major development using PRO IV when it merged with Chrysler. PRO IV contributed 14.3m pounds ($22.2m) to revenue last year.
Shares in MDIS slumped 20% to 20.5 pence after the seventh profit warning issued since the company floated in 1994. The board says that the operating profit in its core UK operations will be more than offset by the losses in Glovia and PRO IV and a material operating loss is expected for the half year. Chastened directors admit this financial performance is unacceptable and are accelerating the strategy of focussing on its profitable core business in the UK. The board says it has begun to take steps to substantially reduce the group’s exposure to the ERP and development tools sectors.
