Jakovljevic - April 27th,
In March, Great Plains Software, Inc., a leading provider of e-business
solutions for the mid-market, announced financial results for the fiscal
quarter ended February 29, 2000. Great Plains reported record third quarter
revenues of $48.1 million, a 34% increase over the same period last fiscal
year. Revenues for the nine months ended February 29, 2000 were $135.3
million, an increase of 43% over the same period last fiscal year. Net
income and diluted earnings per share for the third fiscal quarter, excluding
the effect of amortization of acquired intangibles, were $3.5 million
and 21 cents per share, respectively. Consensus EPS reported by First
Call is 20 cents. These results compare to $3.5 million and 24 cents per
share for the same period last fiscal year.
"In the mid-market, business is becoming e-business. Increasingly, every
mid-market customer realizes the need to become electronically interconnected
with their community including their suppliers, customers, employees and
prospects. Great Plains and our partners are delivering the e-business
solutions today to enable these companies to thrive in this new interconnected
world," said Doug Burgum, chairman and CEO of Great Plains.
following are some of the highlights that have been announced or occurred
since Great Plains' last earnings release:
- Great Plains enhanced the Sales and Marketing Series of Great Plains
Siebel Front Office with the addition of Telebusiness for telemarketing
campaign management. The Sales and Marketing Series is fully integrated
with its core ERP products, eEnterprise and Dynamics for SQL Server.
- Great Plains' network of Application Service Provider (ASP) partnerships
grew to 27. The ASP offering expands the prospect base, adds incremental
distribution, and provides additional business opportunities to partners.
- Great Plains announced immediate support for the Microsoft Windows
2000 operating system with its leading e-business product solutions,
eEnterprise, Dynamics, and Great Plains Siebel Front Office.
- Great Plains continued its European expansion with the establishment
of offices across Germany, Austria, and Switzerland. Through acquisitions,
Great Plains added 100 team members, 80 partners, and more than 1,600
customers across this European region.
- Great Plains acquired PWA Group, Limited, a leading provider of
Web-based employee-facing solutions and upper-tier mid-market human
resources and payroll solutions. This acquisition provides Great Plains
a strategic e-business employee-facing component and significantly
expands its human resources and payroll offerings.
- Great Plains grew its community of mid-market customers and expanded
its reseller partner channel through the acquisition of RealWorld
Corporation, a developer of accounting and business solutions. This
acquisition added 20,000 customers and 200 partners to the Great Plains
- Great Plains announced the acquisition of FRx Software. FRx's Web-centric
analytic applications are the standard for mid-market financial reporting
and have been marketed with Great Plains' solutions since 1994. FRx
Software will operate as an independent, wholly owned subsidiary of
Great Plains and will continue to market it solutions through existing
and new distribution relationships.
- Great Plains and Scala Business Solutions N.V. formed a strategic
partnership to collaborate and deliver additional e-business and enterprise
solutions to global customers, including the development of a new
generation of Wireless Application Protocol (WAP) products to extend
the e-business desktop to a variety of devices.
- Great Plains released the Call Center application for Great Plains
Siebel Front Office. The Call Center application is an integrated
sales and service solution for universal call agents to address outbound
sales opportunities while conducting inbound support.
- AppNet, Inc. and Great Plains partnered to design a Web-based business
environment that delivers personalized, end-to-end business processes,
community interactions, and buying power aggregation to any interconnected
- Great Plains added e-business banking functionality through the
addition of funds transfer, pay tracking and reconciliation applications.
These e-bank applications electronically interconnect businesses and
banks and fully integrate with eEnterprise and Dynamics.
Over the last 18 months, Great Plains has made a big noise and established
itself as a low-end mid-market leader while remaining constantly profitable
(See Figure 1). Great Plains has recently taken full advantage of its
favorable market capitalization to extend both its foothold in the coveted
small-to-medium (SME) ERP market segment and fill the current gaps within
its product portfolio and geographical coverage.
believe that the company struck a good balance in extending its offering
through both acquisition and partnering with best-of-breed vendors. Further,
it has been impressive in selecting partners and integrating disparate
products. Nevertheless, we believe that the company should now take a
deep breath and carefully devise its future moves. Rampant additional
acquisitions may lead to an unmanageable product portfolio and wear thin
corporate financial and human resources.
Moreover, the company will be faced with the following challenges.
it will have to integrate its full suite of acquired applications, since
some of its fierce competitors within the SME market, like Solomon Software,
promote their single code base for the entire product range as a big advantage.
it can expect growing pains in merging disparate product lines and training
the newly extended large affiliate channel.
Great Plains will have to beef up its multi-site manufacturing and distribution
functionality as well as its multi-national capabilities in order to remain
the leader in the SME market. The dot.com companies are increasingly realizing
that the fancy 'click' side of the business is a mere castle in the air
without a proper 'brick' business foundation. Will these capabilities
be achieved with yet another acquisition?
We generally recommend including Great Plains in a long list of an enterprise
application selection to small and mid-market companies (with $1M-$250M
in revenue). Great Plains should be included on any package selection
short list within the SME market where electronic business and accounting
modules are the main pillars of an enterprise application.
Any organization evaluating Great Plains should consider existing functionality
only, and, in the case of final selection, should negotiate incorporation
of new applications components now at negotiated license fees, given Great
Plains' recent increase in new product announcements.