Anyone that bought the hype that Menlo Park-based Informix Corp was eating Oracle Corp’s lunch and was beating the market leader all ends up received a very rude shock indeed yesterday when the company warned that it expects to report a substantial operating loss and net loss for the first quarter because its sales are less than expected. It now expects revenue for the first quarter to March 30 to be in a range of an embarrassingly low $130m to $145m compared with $204m in the year-earlier period – We saw weakness in all geographic regions, particularly in Europe, said chief executive Phil White, adding We failed to close a number of large transactions at the end of the quarter for reasons other than competition; he also said that with regard to sales of its Unix relational database products, we may have lost momentum as a result of sales and marketing over-emphasis on emerging object- relational technology and the lack of corporate focus on our NT products and their price-performance benefits. A couple of Wall Street brokerage houses cut their ratings on Informix immediately after the news, sending the stock into free fall; some suggested the loss might end up being even greater than forecast as the company might take the opportunity to load up any other expenses and clean house. Software-watchers at Morgan Stanley & Co Inc aren’t taking the Informix party line on events however, declaring say the shortfall was too large to blame on a few slipped deals or general weakness in Europe. In our opinion, to miss the revenue line by $100 million, or nearly by half, there must be a strategic mis-step or at least a planning assumption that’s been called in to question. In this case, it’s a combination of getting from several existing products to the next generation product in addition to competition. By this it means the transition to the object-relational Universal Server database, which is getting headlines but not contracts. The initial Universal Server release is more a product was more a proof of concept product than a rugged, tested product that Informix sales representatives could push on their best accounts for critical applications. The rugged release of Universal Server isn’t expected until June or July and tool support from third parties is still an issue, as is systems management. It is precisely why Oracle Corp is placing so much emphasis on testing its own object-relational Oracle8 offering database and isn’t going with a product that’s only half-cooked. The bank goes on to observe that the years of evolution behind Informix On-Line are hard to recreate for Universal Server. There is often a high price to pay for leap-frog strategies in the enterprise given the conservative buyers in that market. Moreover, prospects are loathe to buy On-Line server even though it’s a proven performer because they’ve seen all the fanfare around Universal Server and know that’s the future direction. With Informix SE, Informix On- Line, Informix XPS (massively parallel), and Universal Server, a prospect and a sales representative have a lot to wade through to determine what product to buy. CEO White has been saying for sometime that there will be little revenue from Universal Server until the second half of 1997, and the company finished $61m shy of his goal of becoming a $1bn company in 1996. It seems even less achievable this year. Final results are due at the end of April. You don’t get away with that kind of warning unscathed, and Informix shares lost 34.5% of their value yesterday, plummeting $5.52 to finish at $9.90, albeit a slight improvement on the $8.75 they were trading at in the morning, a three-year low.
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