Has Sybase Inc really beaten off the database demons? Its first quarter figures yesterday certainly seem to suggest that it has returned to profitability, the prerequisite for a return to actual growth in the later half of the year. First Call had been looking for $0.01 a share profit, so Sybase easily beat that at $0.05. President and chief executive officer Mitchell Kertzman certainly claims the results, allied with its announcement last week (CI 3,135) of its next-generation Adaptive Component Architecture (ImpactNow), put Sybase back in the frame as an aggressive competitor going forward. Sybase’s first three months, closing at the end of March, showed revenue of $241.9m, slightly down for the same period last year ($243.7m), with net income of $3.5m compared to a loss of $6.9m in 1996. Software license fees were still down from the same period last year, from $148.0m to $135m, with service fees rising to compensate, from $95.7m to $106.7m. Kertzman acknowledges that core database sales are still not as strong as they could be, though he cites nice contribution from its data warehouse IQ product and the SQL Anywhere desktop/mobile rdbms as good performers this period. But he counters that now the basic cost and expenses structure has been straightened out at the corporation, and once the successor to the Sybase SQL Server 11 database engine, Adaptive Server (11.5), is out of beta, the company will be posied for true recovery. Costs have definitely been an area of work at Sybase under Kertzman’s watch since he became CEO in July 1996, with total costs and expenses being cut from $255.4m to $237.2m this quarter, with R&D being cut from $43.1m to $35.3m and sales and marketing expenses also been trimmed, down from $130.3m to $114.6m. Cash balance increased sequentially from $174.5m last quarter to $194.1m due to focused spending and expense management. Jack Acosta, senior vice president and chief financial officer, says this good housekeeping is not a result of any specific cost-cutting programs this quarter but due to good collections and good expense management generally. In geographies Sybase is still tilted very much toward North America – at 62% of sales – with Europe representing 23% and Intercontinental the balance. Kertzman says North American sales were flat year on year, Europe slightly down, but with a pick-up in the rest of the world. Sybase’s share price has slipped from just under $35 around the end of 1995 to a 52-week high of $27.75 to a yearly low of $12.125; it closed yesterday slightly down at $14.875.