Leaner Ashton-Tate Hopes to Break Its Jinx of the Past
The ghosts and goblins of Halloweens past are still haunting Ashton-Tate.
On that day two years ago, the Torrance-based personal computer software publisher released the much-awaited update to its flagship product, dBase, the market-leading database management program.
But dBase IV was riddled with errors, and by the time the company realized the enormity of its problem, it had shipped thousands of copies. The blunders led to losses that now exceed $50 million, layoffs of about 300 workers, a market share erosion and--potentially most devastating--lost momentum in developing the next generation of products.
Now, as the company is set to release its latest quarterly earnings results today, the question is whether anything or anyone can straighten out the mess and spare Ashton-Tate the fate that has befallen many other faded software superstars over the last decade: being squeezed out of business or acquired.
Further, analysts say, the company, whose share price has fallen from $24 in 1989 to $6.75, has only until the end of next year to overcome its hurdles, and the timing couldn’t be worse. Personal computer sales have started to lag and could be hit even harder if the economy continues to slow. Meanwhile, Ashton-Tate’s traditional rivals have continued to steal market share, and new competition from big industry guns Microsoft and Lotus Development is expected next year.
Finally, the entire PC database software industry is on the verge of major technological advances that could leave Ashton-Tate at the starting gate.
“It’s a major challenge for anyone--even God--to resurrect this franchise,” says Peter Rogers, a technology analyst with Robertson, Colman & Stephens, a San Francisco brokerage.
Nevertheless, the challenge was given nearly six months ago to William P. Lyons, a 45-year-old former International Business Machines marketing executive who had never before headed a corporation, having spent his entire 19-year career at IBM.
Ashton-Tate insiders say the board has charged Lyons with restoring the operational discipline and management focus that many say had begun to disappear under the loose reigns of his predecessor, Edward M. Esber Jr., who resigned as chairman and chief executive in April but still holds the title of vice chairman, although without any day-to-day involvement.
“Ed’s focus was more outside the company,” said the low-key, plain-speaking Lyons in his first extensive interview since assuming the jobs of president and chief operating officer last May. “I’m crossing the T’s and dotting the I’s.”
Added Lyons guardedly: “We understand what we have to do, and we have a plan to do it. Now we just have to do it flawlessly.”
More tangible evidence of his efforts are the weekly meetings among top managers at the company’s Torrance headquarters and its San Jose engineering labs, as well as monthly sales meetings with top domestic and international marketing executives. Lyons even holds monthly question-and-answer sessions with the entire staff in Torrance to reinforce the company’s priorities and make his presence well known.
Lyons’ first goal, which the company achieved July 31, was issuing a corrected version of dBase IV. Although reviews over the last 60 days have been modestly favorable, sales have yet to ignite.
Lyons’ next priority is getting the company to make money. Ashton-Tate Chairman Carmelo J. Santoro says the company will achieve profitability this year. But analysts are widely predicting that the company will report yet more red ink when it releases its third-quarter earnings this afternoon. Early estimates are that the losses will range between $1.25 million and $2.5 million, although some analysts are prepared for losses as high as $5 million.
Still, analysts acknowledge, under Lyons the company’s 18-month slide has halted. But they remain skeptical that he, or anyone, can solve the company’s fundamental problems: its fading technological prowess and declining market position.
“Long term I have my doubts about this company,” says James Weil, an analyst with SoundView Financial in Stamford, Conn. “From the technical standpoint, they are woefully behind. All they have done lately is bring out a product that they should have introduced originally two years ago.”
Weil and other analysts say Ashton-Tate is lagging competitors on developing database software that exploits new and more graphically oriented user formats. And they argue that the company may miss the industry’s key shift to software that is shared, or distributed, through networks of personal computers.
Lyons says Ashton-Tate engineers, under the direction of David Proctor, a former IBM software project director, haven’t overlooked the coming technology shifts and are already working on a new database program to work with Microsoft Corp.’s Windows graphic format. However, he declined to reveal when the product would be ready for release.
In the meantime, engineers are nearing completion of several key products, including dBase versions for the Apple Macintosh, due next year, and for workstations made by both Sun Microsystems and Digital Equipment Corp., scheduled for release later this year.
DECLINING SHARE
Ashton-Tatte market share for database software, based on revenue.
Source: International Data Corp.
