Hit by weak sales that are expected to result in a third-quarter loss, Informix Corp. recently announced that it’s splitting into two separate operating companies – one focused on its flagship databases, the other on Web publishing, e-commerce and business intelligence software that will work with multiple databases.
The break-up effectively erases Informix’s March acquisition of Ardent Software Inc., a data warehousing vendor that was based in Westboro, Mass. The as-yet unnamed business intelligence and e-commerce venture will be headquartered at Ardent’s facility, while the database company – to be called Informix Software – will be based in Silicon Valley. Informix officials said the two companies will target “fundamentally different customers.”
As part of the split, Informix said it plans to lay off another 400 or so workers on top of the 500 people that are being let go in a workforce reduction announced in August. In addition, the company warned that it expects to report a third-quarter operating loss of US$15 million to US$24 million, which will be widened by restructuring charges and other one-time expenses totalling as much as US$90 million.
The break-up announcement comes two months after Informix reported lower-than-expected revenue and earnings for the second quarter and ousted CEO Jean-Yves Dexmier, who was replaced by Ardent CEO Peter Gyenes. Five business units were consolidated into two divisions, and Informix officials said separating into two companies is the last step in a strategic realignment aimed at kick-starting revenue growth.
“The first couple of quarters of this year have been disappointing,” said Pete Fiore, a former Ardent executive who will become president of the new e-business company. “We determined the best way to proceed was to separate the companies,” Fiore said. “We really need to provide ruthless focus around customers and markets in each business.”
For example, Fiore said his company will try to combine content management, e-commerce and business intelligence technologies into a single product offering aimed at so-called click-and-mortar companies that need to integrate their traditional businesses with newer Web operations. On a stand-alone basis, Fiore said, the company expects to have revenue of US$120 million to US$130 million this year and to become profitable next year. It will have about 1,100 employees after the break-up is completed, he added.
Meanwhile, the Informix Software database operation will try to breathe new life into the company’s core database technology. The database company, which expects revenue of US$780 million to US$800 million this year and will start out with 2,300 employees, is expected to be run by Jim Foy, another former Ardent executive who, like Fiore, was named a senior vice-president at Informix last month.
In an attempt to revitalize its database sales, Foy said, Informix has a new technical architecture on the drawing board after recently completing a detailed analysis of its existing technology. The plan is to develop databases that are “very scaleable” and can store multiple forms of content, he added.
“We’ve never been able to establish a code base that provides the more attractive features of the [database] engines that we have,” Foy said. “[But] we’re converging to the point where we’ll have far fewer code streams and they’ll be very high performance.”
Although the new architecture will eventually replace the company’s existing products, Foy said the change should be painless for current users. “We’re intending that the installed base will be able to migrate fairly smoothly into the new environment,” he said. “What they’re using now, they can continue to use with confidence.”
In a report posted on its Web site, Boston-based consulting firm AMR Research Inc. described Informix’s break-up move as “a last-ditch effort to reinvigorate” the company’s database business.
The move may have come too late to help Informix take back much database market share from Oracle Corp. and other rivals, AMR said. But it added that the new management team from the Ardent side of the company “is showing it can make tough decisions and is ready to fight.”
The two separate companies will initially be wholly-owned subsidiaries of Informix Corp., but the company said it eventually plans to set them up as independent publicly-traded operations. Final details of a plan for doing so are expected to be disclosed later this year.
As part of the announcement, Informix also said it has named Gyenes, already president and CEO of the company, as chairman. In addition, corporate headquarters have been relocated from California to Ardent’s Westboro facility.