Shares in Merant Plc rose 4% to 165 pence ($2.65) as the twin-headquartered group with bases in Newbury, England and Mountain View, California produced results better than the market’s expectations. Net income for the fourth quarter to April 30 was $1.3m, down from a profit of $1.4m on revenue that declined 10.2% to $96m. For the year, Merant turned in a loss of $28.5m down from a profit of $23.1m on revenue down 1.2% at $374.2m.
Merant is the product of the merger, one year ago, of the profitable Cobol tool developer, Micro Focus Group Plc, which paid $534m for applications enablement software and services company Intersolv Inc (CI No 3,434). Initially, the merger was a disaster. Micro Focus was out of its depth trying to absorb such a large acquisition. By December 1998, Gary Greenfield, the former chief executive of Intersolv Inc, had taken over as CEO.
Greenfield is trying to restore credibility to the company with a name change to Merant and a new focus as an enterprise application development company. Merant now promotes itself as a company that has passed through the Y2K bulge and says revenue related to millennium changes were only 10% to 11% by the fourth quarter compared with 23% to 24% a year ago. Nor does it detect any falling off in sales as a result of customers’ concentration on Y2K spending.
Quoting IDC figures showing the enterprise application development market growing from $2.9bn in 1997 to $6.2bn by 2002, Merant boasts it is the leader in this market. It claims to be better positioned even than IBM to cash in on the need to build legacy extensions for e-commerce. A botched sales strategy by Micro Focus is blamed for the slump in sales last year in the crucial US market.
