The next two years look like being crucial for German giant Software AG as it looks to get back in the black for a flotation currently planned for early 1999 and attempts to fulfil its goal of becoming a one billion deutschmark ($551m) company by the year 2000. Software AG, which last year had revenues of 700m deutschmarks ($386m), has lost money for the last two years, a fact chief executive officer Dr Erwin Koenigs attributes to a lack of cost discipline as the firm incurred costs due to a restructuring of its vertical operations and start up expenses associated with expanding its offices in new foreign markets. The company says it is planning to concentrate on growing its electronic commerce and componentware businesses over the next couple of years and is looking to boost sales of its iXpress website web interface and Entire broker middleware for integrating back end software with the web. It now offers web interfaces on all products across its Natural, Adabas and Entire lines. On the componentware side, the company is pushing Microsoft’s DCOM and is developing it for non-Microsoft platforms. It is already up on Sun Solaris and Digital Unix for Alpha and there are plans for ports to other Unix flavors, such as Hewlett Packard Co’s HPUX and IBM Corp’s AIX. Koenigs, appointed in March following the departure of founder Peter Schnell, raised $150m in March by selling an undisclosed majority stake in its US arm to Thayer Capital Partners, a Washington DC- based investment firm (CI No 3,132). The cash injection will fund future research and development without the need for external capital for the next couple of years, said Koenigs. Expenditure has also been further cut by curtailing a costly move into financial back office software, and last year saw a 15% cut in the company’s worldwide workforce. The Darmstadt, German-based firm moved back into profitability in the first and second quarters of this year, and says it’s pretty certain of making an overall profit for the year, clearing the first hurdle for the flotation on either Nasdaq, or more likely the Hamburg stock exchange.
