Symix Maintains Consistent Profitability Despite Y2K Market Conditions

Event Summary

On October 21, Symix Systems, Inc. announced financial results for the first quarter ended September 30, 1999. Total revenue increased 19 percent to $32.1 million, compared with $26.9 million for the same period in the prior year. The Company reported net income of $895,000, or $0.12 per share (diluted), versus $857,000, or $0.12 per share (diluted), for the same period last year. Services revenue for the quarter was $18.7 million, a 51 percent increase from $12.4 million for the same period in the previous year.

"Symix has remained solidly and consistently profitable despite difficult market conditions," said Stephen A. Sasser, Symix President and Chief Executive Officer. "Year 2000 concerns have affected the market for traditional enterprise software systems. Symix continues to aggressively invest for the future, which centers on eBusiness and supply chain management solutions integrated with our traditional back office systems for midsize manufacturing and distribution companies. We are uniquely positioned to help these mid-market companies conduct business with their customers and suppliers over the Internet, and then support this new e-driven business with the required levels of operational efficiency and increased speed. Symix intends to announce a new suite of eBusiness applications, supporting services and new partnerships to a record-setting crowd at SymixWorld 99, our upcoming annual customer conference."

Market Impact

Although much less visible and publicized than its larger brethren, Symix Systems continues to be a profitable vendor. Particularly plausible is the fact that profit has been posted despite a 63% increase in R&D expenses (See Chart). There are a number of reasons for this as we emphasized in our research note on Symix Systems in September 1999 (See Symix Sytems: Shifting SME's Focus to Their Customers). The first reason is the Company's strong global position in the Small-to-Medium Enterprises (SME) market within the discrete manufacturing segment of the ERP market, where the Tier 1 ERP vendors are currently achieving very modest penetration. Second, Symix Systems is reaping benefits from on-time release of its fully integrated supply chain software (CSRP), which still proves to be a tall order for most of its competitors. Third is Symix Systems' strong presence and channel in the Asia/Pacific market, which is currently experiencing a revival.

User Recommendations

As a summary of our recommendations in TEC's note on Symix (See Symix Sytems: Shifting SME's Focus to Their Customers), Symix should be included on a short list in any selection within the SME market (companies with $30M-$500M in revenue) where discrete manufacturing, assembly, and distribution modules are the main pillars of an enterprise application.

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