MAPICS Red Ink Stained While Extending Its Offering
As published in the company's May 9 press release, MAPICS Inc., a leading
provider of e-business enterprise applications for manufacturers, announced
the controlled delivery of the Point.Man Extended Enterprise Edition,
which enables customers, suppliers, distributors and partners to collaborate
via the Internet. MAPICS has provided Enterprise Resource Planning (ERP)
solutions to the manufacturing community for more than a decade, and with
the latest version of the Point.Man release, MAPICS endeavors to become
one of the first Extended Enterprise Application (EEA) providers to offer
true thin-client, appliance-independent connection through the Internet
directly to the ERP backbone.
Point.Man product improves on typical EEA models by providing data security
down to the field level," said Linda Brooks, MAPICS' vice president of
extended enterprise solutions, "In the new e-business market, where data
is shared directly with customers and value-chain partners, content-sensitive
security is a critical element of the solution."
on May 4, MAPICS Inc. reported results for the second quarter of its fiscal
2000 that included earnings of $640,000, or $0.03 per share, excluding
special charges and goodwill amortization. Total revenue for the second
fiscal quarter increased 14 percent to $34.5 million from $30.3 million
a year ago. In the year-earlier period, net income was $2.0 million, or
$0.09 per share (See Figure 1).
the three months ended March 31, 2000, the Company recognized special
charges and goodwill amortization, primarily as a result of the purchase
of Pivotpoint in January 2000. These items amounted to $18.3 million before
income taxes, of which $12.3 million were non-cash items. Including these
special charges and goodwill amortization, the Company reported a net
loss of $12.3 million, or $0.69 per share, for the second quarter.
results are in line with the expectations we released last month," remarked
Dick Cook, president and chief executive officer, "but far short of what
we initially had hoped to report for the quarter. We continued to find
some industry-wide hesitancy by customers in placing software orders during
the quarter. Additionally, much of our managerial focus was dedicated
to a rapid, efficient integration of Pivotpoint. This effort consumed
meaningful time and energies not only from our organization but also from
our sales Affiliates. Although this commitment clearly had an impact on
our revenue this quarter, we are receiving enthusiastic feedback about
the new offerings that MAPICS now has available. Continuing the development
of these extended enterprise solutions will require a considerable investment,
but we expect them to account for an increasing proportion of our total
business and anticipate improved corporate performance over the remainder
of this fiscal year."
Cook added, "As a result of the acquisition of Pivotpoint, MAPICS now
offers mid-sized manufacturers integrated e-business solutions for all
of the industry's leading platforms. We intend to expand our capabilities
aggressively through new product offerings and strategic marketing alliances.
We did record special charges for the second fiscal quarter, principally
related to the acquisition of Pivotpoint, but these were largely non-cash
items reflecting the opportunity to shift some of our research and development
resources from existing projects toward enhancing the established Internet
technologies that we acquired."
While there may be a reason for concern due to flat license revenue and
a tainted profitability track, which has long been impeccable, there is
no real cause for serious users' concern. We concur with MAPICS' justification
of its Q2 loss and also believe the company's decision to deal with acquisition
charges all at once was brave and wise.
combination of MAPICS and Pivotpoint has a potential of a formidable player
within the mid-market for business applications, with a notable combination
of customers and channel partners. There may be a synergy from a focus
on the same market segment (mid-sized manufacturing companies) but with
different products strengths in different manufacturing segments. And
while MAPICS XA runs only on AS/400, Pivotpoint's Point.Man runs on Unix,
NT, and Linux, which rounds up the set of the most commonly used platforms.
obtaining another ERP system, Point.Man, MAPICS has also benefited in
adding the Maincor enterprise asset management (EAM) system, the Thru-Put
advanced planning system (APS), and a slew of e-business modules to its
fold, as part of the deal. These products are in tune with the MAPICS
focus and can help it mine its existing customer base.
biggest challenge for MAPICS and its affiliate channel will be the management
of dual flagship product lines. It will be difficult to support existing
customers and existing products, while juggling competitive product lines.
Since the product lines seem to remain separate in the long run, it will
add additional development costs, as well as provide a challenge in explaining
the position of the different products. The company will have to revise
its sales strategy of how to optimize the sales of two product lines with
somewhat overlapping functionality and avoid a likely internal competition.
Not to mention the need of showing 'one face' to customers. Finally, MAPICS
can expect growing pains in merging disparate product lines and training
the newly extended large affiliate channel.
MAPICS should be included on the selection list for mid-market companies
(with $50M-$500M in revenue), where discrete, batch manufacturing, engineering
and logistics modules are the main pillars of an enterprise application.
MAPICS is a renowned mid-market ERP vendor, with a long tradition and
a large, loyal and satisfied customer base. However, since we expect growing
pains in merging disparate product lines within the current affiliate
channel, potential clients should conduct a preliminary research on industry
expertise and reference sites of a regional MAPICS affiliate service provider
when the MAPICS/PivotPoint product is selected. They should also familiarize
themselves with products' strengths/weaknesses within certain vertical
companies outside of above-mentioned industries may benefit from evaluating
MAPICS non-core ERP product components on a stand-alone basis for their
e-business needs and leverage that information against other vendors in
the selection. As for the new added functionality through partnerships,
users are advised to ask for firm assurances on the availability and future
upgrades timeframes, and more detailed scope of combined product functionality.