Studio Software Has Closed Its Doors and Is Trying to Sell Its Technology
After spending $5 million and five years trying to develop and market a desktop publishing software system, Studio Software has quietly closed the doors of its Irvine offices and is attempting to sell is assets.
Two directors of the now-defunct company said Studio was caught in a bind between lagging sales of its products and the unwillingness of venture capitalists to pour more money into its losing operations. They said the company, which lost more than $4.2 million during its five years of existence, ceased operations about six weeks ago, laying off about 25 workers.
Officials said that the company has not filed for bankruptcy and that former executives are trying to sell its technology and assets to another software concern. Potential buyers were not disclosed and no purchase price was revealed.
“They had a good product and they needed maybe just another year and another $1 million to make it work,” said former director Donald Fuller, chief executive of Cogensys Corp. in San Diego. “But the venture capitalists had been with the company for a long time and just couldn’t wait any longer.”
Business prospects for the small, struggling company began unraveling late last year when a planned initial public offering of its stock failed to muster sufficient investor interest.
The offering had been expected to raise up to $4.8 million desperately needed to promote and market the company’s two desktop publishing software programs for the IBM personal computer and for IBM-compatible models. The two programs are Do-It, the initial program, and FrontPage, a refined version introduced last August.
As a result of the aborted stock sale, the company was forced to ask for additional funds from its venture capital backers, who had already made Studio Software one of the best venture-financed software companies in the nation.
Although the backers gave additional funds, they tied the money to specific sales goals which the company failed to meet, according to David Bays, a former Studio Software director and official of Greyhound Capital Management Corp.
Bays blamed some of the company’s difficulties on its early entry into the desktop publishing market for IBM personal computers. The market is dominated by Apple Computer Co.’s Macintosh model, and programs for the IBM have only recently begun to chip away at that strong position.
“It was a difficult market for Studio,” Bays said. “It was slow to develop, and now that it appears to be here, there’s not enough money for Studio to take advantage of it.”
