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MAPICS Reports Solid Profitability Despite Dismal Fiscal 1999 4% Growth

Written By: Predrag Jakovljevic
Published On: November 3 1999

MAPICS Reports Solid Profitability Despite Dismal Fiscal 1999 4% Growth
P.J. Jakoljevic - November 03, 1999

Event Summary

On October 27, MAPICS, Inc. reported revenues and net income for the fourth quarter and fiscal year ended September 30, 1999. Total revenues for the fourth fiscal quarter amounted to $33.9 million compared with $39.1 million in the year-earlier period. Net income for the quarter totaled $2.8 million, or $0.14 per share (diluted), compared with $6.4 million, or $0.27 per share (diluted) in the year-ago quarter. For fiscal 1999, total revenues amounted to $134.7 million compared with $129.7 million in fiscal 1998. Net income for the year totaled $13.2 million, or $0.62 per share (diluted), compared with $18.7 million, or $0.81 per share (diluted) in the prior year.

"MAPICS has remained solidly profitable during a period of unprecedented change for providers of Enterprise Resource Planning (ERP) solutions," remarked Dick Cook, president and chief executive officer. "We are continuing to find some hesitancy in purchasing decisions which appears likely to persist at least through the end of calendar year 1999. Although we took meaningful actions to contain operating expenses during the year, we were able to support the investments necessary to significantly enhance our solutions for mid-sized manufacturing establishments. We are confident that our decision to maintain active product development and marketing initiatives will leave us well positioned to capitalize on the future growth opportunities in our marketplace."

Market Impact

We do not find this news to be a surprise. On the contrary, it reinforces the prediction we outlined in our research note on MAPICS in October 1999 (See TEC Technology Research Note: "MAPICS: Will Customer Satisfaction be Enough?", October 1st, 1999), where we predicted a significant decrease in MAPICS' growth rate and revenues. Nevertheless, MAPICS' management deserves commendation for making prudent product development moves, while maintaining profitability during very challenging times (See Charts). We regard the recently delivered products and initiatives (e-commerce, advanced planning and scheduling, multi-site capabilities, enhanced outsourcing services for mid-market manufacturers) as wise and in tune with vendor recommendations in the note. However, MAPICS has yet to resolve its biggest challenge: a lack of an NT-based product, and we believe that the Company will have to attend to it within the next 9 months at the latest. Failure to do so will put MAPICS in a very difficult situation, having to rely mainly on its existing customer base for its future revenue generation.

User Recommendations

MAPICS' challenges do not change the views in our MAPICS note (See TEC Technology Research Note: "MAPICS: Will Customer Satisfaction be Enough?", October 1st, 1999) that MAPICS should be included on the selection list for mid-market companies (with $50M-$500M in revenue), where discrete and batch manufacturing and logistics modules are the main pillars of an enterprise application. MAPICS remains a renowned mid-market ERP vendor, with a long tradition and large loyal and satisfied customer base.

 
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