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.