Event Summary
For
the last several months, MAPICS, Inc. (NASDAQ: MAPX), a global provider
of extended ERP applications for world-class mid-sized manufacturers, has embarked
on a painstaking process of producing a strategy going forward that would pragmatically
blend the company's traditional values and success factors with new approaches
to stay in tune with market trends. During this time, the company has been energized
with a new functional structure and an expanded executive management team. It
has evolved its marketing and revamped its solutions to focus on business issues
and specific discrete manufacturing verticals and to thereby appeal to existing
and prospective customers. The executive team includes a new chief financial
officer (CFO), chief technology executive (CTE), chief marketing executive (CME)
and senior vice president of North American sales persons to fill both existing
and newly created positions.
Still, the company has not departed from its conservative approach of delivering practical innovations and bulletproof applications for its customers, and from its proverbial fiscal discipline. Despite largely flat revenues for the last few years and a major acquisition cost (see Figure 1), the company still has an impressive cash amount of nearly $24 million, while $19 million debt has been paid off during last 12 months.
On
October 30, MAPICS reported net income according to Generally Accepted Accounting
Practices (GAAP) for the fourth fiscal quarter ended September 30, 2002, of
$4.0 million, including a gain of $2.3 million from the settlement of a royalty
obligation, versus a hefty loss of $26.3 million, in the year-earlier period
(see Figure 1).
Figure
1.
*
Primarily represents a goodwill write down of the PivotPoint acquisition
However,
the Company reported adjusted earnings for the fourth quarter of $2.7 million,
compared with $2.6 million, or in the year-earlier period. Adjusted earnings
represent income before goodwill amortization, restructuring charge and other
items, net of income taxes. Revenue for Q4 2002 totaled $30.5 million, a 13%
drop versus $35.2 million a year ago. For the fiscal year ended September 30,
2002, the Company reported net income (GAAP) of $13.7 million, compared with
a loss of $27.0 million in fiscal 2001. MAPICS reported adjusted earnings for
fiscal 2002 of $9.9 million, compared with adjusted earnings of $7.6 million
in fiscal 2001. Still, total revenue for fiscal 2002 was $128.3 million, a 7%
drop compared with $138.2 million in fiscal 2001 (see Figure 2).
Figure
2.
*
Primarily represents a goodwill write down of the PivotPoint acquisition
As a result, throughout October, MAPICS has been given a flurry of accolades and Top Lists inclusions by many magazines and other institutions:
- The most recent
one was on October 17, when the company was named to the first Deloitte
& Touche Atlanta Technology 50 list. MAPICS was reportedly ranked 18th
out of 50 Atlanta area technology companies, based on revenues for the most
recent fiscal year ending on or before December 31, 2001. This comprehensive
list of the top 50 technology companies, based on revenue, in Atlanta and
surrounding counties is a continuation of the former Fast Tech 50,
which was conducted by Arthur Andersen for 18 years.
- Then, on October
15, MAPICS announced that Forbes magazine has named it one of the 200
Best Small Companies of 2002, a compilation of financially strong small-cap
businesses. With an overall ranking of 106, MAPICS was reportedly one of only
25 technology companies recognized on the prestigious 200 Best list. According
to Forbes, all of the companies included on the 200 Best list are profitable,
earning a minimum 5% net margin over the latest 12 months, and all have a
five-year average return on equity (ROE) of 5% or greater.
- Further, on
October 8, MAPICS announced that it has been named one of Atlanta's A+
Employers by the Atlanta Business Chronicle. Among the list of
26 finalists, MAPICS reportedly ranked third, behind two companies that tied
for first. MAPICS, along with nearly 120 other Atlanta-area companies, submitted
detailed information about its benefits and work environment to be considered
for the honor as one of the best places to work in Atlanta. The survey evaluated
companies based on employee benefits such as 401(k) plans, insurance, vacation
and flexible work schedules, as well as employees' attitudes toward their
employers.
- Finally, on
October 4, the company announced its inclusion in the Software 500,
Software Magazine's list of the world's foremost software and services
providers, featured in the publication's Summer Edition 2002 issue.
MAPICS was reportedly ranked 166th out of 500, based on software revenue.
The Software 500 ranking is based on total worldwide software and service
revenue for 2001, including revenues from software licenses, maintenance and
support, training and software-related services and consulting. Suppliers
are, however, not ranked on total corporate revenue, since many have other
lines of business, such as hardware sales.
This
is Part One of a four-part article on MAPICS.
Part
Two will discuss the Market Impact.
Part
Three will cover Challenges.
Part
Four will discuss Competition and make User Recommendations.
Strategic Alliance With IBM
As
for its go-to-market strategy, on September 26, MAPICS and IBM Corporation
(NYSE: IBM), the largest IT company in the world and MAPICS' biological parent
from a way back in 1978, announced a strategic alliance to deliver solutions
that tightly integrate business functions and improve collaboration between
suppliers and customers. The combined IBM/MAPICS solutions will target mid-market
manufacturers in the electronics, automotive, heavy equipment and industrial
equipment industries, as it is believed that manufacturing industries hold the
most interest in ERP initiatives, as these companies are constantly looking
for means to reduce costs and increase operational efficiencies in the face
of increased global competition.
The
IBM /MAPICS solutions will include a combination of flexible MAPICS enterprise
solutions on a scalable infrastructure of IBM consisting of IBM eServer iSeries
hardware, WebSphere Application Server, WebSphere MQ message queuing
middleware, and IBM Business Innovation Services are currently used by
some of the world's leading manufacturers, such as Volvo, Bayer,
Pemstar, and Mitsubishi Caterpillar Forklift Europe (MCFE).
Under the terms of the strategic alliance, MAPICS and IBM will jointly market
MAPICS enterprise solutions, which include applications focused on addressing
the major challenges facing manufacturers today, including:
- Reducing lead
times,
- Reducing operations
costs,
- Speeding time
to market,
- Managing outsourcing,
- Managing multiple
locations and global operations,
- Satisfying
customer requirements, and
- Increasing visibility
into business performance.
These
value-based applications are supported by IBM WebSphere Application Server and
WebSphere MQ operating on IBM eServer iSeries and xSeries hardware. IBM
will also provide consulting, customization and integration services for joint
IBM and MAPICS implementations.
Since
May, MAPICS has also been one of the first enterprise application providers
to support the Linux environment running on the IBM iSeries platform. MAPICS
believes to be well aligned with IBM's strategy to further accelerate the adoption
of Linux-based solutions and intends to fully support solutions developed by
Red Hat. The combined technology of MAPICS ERP for iSeries and
Linux for iSeries should supposedly provide improved benefits including
greater stability, reliability, scalability, performance and cost savings.
MAPICS ERP for iSeries' open, Java-based architecture, which features fat-client Desktop, thin-client Internet and wireless deployment, should provide a flexible technology for the iSeries platform to empower manufacturers to, e.g., collaborate more effectively over the Internet, improve customer service, deliver products faster and make better business decisions. In addition to providing users an economical way to deploy e-business server applications, the Linux operating system is reportedly highly scaleable for a large number of transactions and supports rapid innovations by constantly offering new features for users. Its single operating system across server platforms provides easy development, maintenance and skills deployment, and it is also increasingly being used as an application development platform for Web and Web application servers and to drive wireless devices and Internet applications.
Tailored Solutions and One Brand
On
another matter, MAPICS' recent organizational realignment will focus on selling
tailored solutions, which include various enterprise resource planning (ERP),
supply chain management ( SCM), product lifecycle management (PLM), plant maintenance,
and eBusiness collaboration components to address the unique business challenges
of selected world-class manufacturing environments. The company has to that
end been eliminating the use of multiple product logos and names. MAPICS is
now structuring all offerings around one brand -- MAPICS (be it ERP, SCM, Portal,
etc.) and its offerings will no longer be referred to by their current names,
i.e. MAPICS XA, Point.Man, Thru-Put, and Maincor.
This
concludes Part One of a four-part article on MAPICS.
Part
Two will discuss the Market Impact.
Part
Three will cover Challenges.
Part
Four will discuss Competition and make User Recommendations.