SynQuest Posts Mixed Results

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SynQuest Posts Mixed Results
S. McVey - September 28, 2000

Event Summary

Still warm from an August IPO, SynQuest recently reported financial results for the fourth quarter and fiscal year ended June 30, 2000. Total revenue for the fourth quarter increased to $8.1 million compared to $7.0 million for the same period in fiscal 1999. Revenue from software license fees increased by 55% to $5.5 million versus $3.5 million for the three months ended June 30, 1999. Service and support revenues declined 19% to $2.6 million from $3.2 million in the previous quarter and fell 26% from $3.5 million for the three months ended June 30, 1999.

Figure 1.

The revenue figures should encourage investors, but profits continue to elude the Norcross, Georgia-based vendor of supply chain planning and execution (SCP & SCE) software. The company is gradually making its way into positive territory, however. Net loss in the fourth quarter decreased to $2.6 million from a $2.9 million in the previous quarter and was almost half its loss of $4.0 million for the period ended June 30, 1999.

Though the new prescription for success on Wall Street is profitability, SynQuest has chosen to highlight its record six-month license revenues of $9.4 million. According to Tim Harvey, president of SynQuest, "The company's breakthrough technology of financial optimization and real-time management has driven our strong license growth for the past two quarters. As companies move beyond Y2K issues and focus on the Internet, they are finding new ways to customize their products and services by managing an extended, virtual supply chain. Our customers are buying SynQuest solutions because our products give them the ability to make faster and smarter business decisions, improving operations and maximizing profits."

Figure 2.

Market Impact

Ignoring for a moment the new puritanism among investment analysts who expect to see profitability before they buy, SynQuest is doing well. Its growing license revenues indicate that customers are buying its manufacturing-based supply chain planning and execution solutions in increasing numbers.

SynQuest can improve its chances for success by building on momentum from the following accomplishments over the last six months:

  • A new slate of e-business solutions introduced over the last six months, including lean logistics planning, supply chain master sourcing, and real-time order promising, fulfillment and status.

  • A strong vote of confidence by Ford Motor Company, which signed a multi-million dollar contract with SynQuest - Ford's third purchase of SynQuest e-business software.

  • Multiple new accounts, including software licenses with Alcoa, Atlantic Metal Products, ABB Vetco Gray, Mikron Industries, and Latasa, not to mention repeat business from existing SynQuest customers Ford Motor Company, Space Imaging, United Dominion, Plasti-Line, Dietal, and Wolverine.

SynQuest was one of the first vendors to integrate advanced planning and scheduling capabilities with manufacturing execution. SynQuest Manufacturing Manager is an attractive candidate for mid-market companies that rely on precise synchronization around production and distribution scheduling. SynQuest has found particular success in the automotive and electronics industries characterized by repetitive manufacturing. Its solutions have also been implemented in process manufacturing environments, such as chemicals and pharmaceuticals, but these are more the exception.

User Recommendations

SynQuest applications have been available for Unix since the company's inception in 1994 and these are probably the most mature of its offerings. Windows NT followed as a server platform a few years later and, most recently, SynQuest partnered with IBM to port its Manufacturing Manager application to AS/400. Current AS/400 users who are evaluating advanced planning and scheduling products in discrete manufacturing industries should consider looking at SynQuest Manufacturing Manager, but should demand to visit the beta-site for the new platform, begun in March at Chesapeake Packaging Company. Face-to-face meetings with users, IS personnel, and management are a crucial part of these visits, enabling prospective clients to learn about kinks and foibles of the new platform first hand.


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