Event Summary
Karl F. Lopker, QAD's Chief Executive Officer, stated, "Our third-quarter growth
was due to a number of key strategies that are now showing results. They include:
our geographic expansion made through acquisitions, the continued expanding
demand for services from QAD's Global Services Business and the growing demand
for our Web-enabled MFG/PRO 9.0. In addition, the alignment of our cost structures
with target levels has been completed."
"There
are signs that manufacturers using ERP products have dealt with their Y2K issues
and are ready to consider new purchases. Specifically, we are seeing renewed
interest from customers and potential customers for our best-of-breed strategy,
and from several companies that are re-thinking their enterprise selections
made within the last year or two. These companies are now seeking interoperable
solutions, such as those offered by QAD, instead of monolithic, proprietary
and inflexible applications," said Lopker. "We see evidence of this in the enthusiastic
reception to our recently announced e-business strategy and product portfolio.
Already QAD is empowering its customers to drive their e-business initiatives
through QAD's e-commerce B2B, B2C, EDI gateway products and our Web-based services,"
Lopker said. "The next step will be to expand our e-business product portfolio
with the upcoming delivery of eQ (formerly On/Q) for Relationship Management.
We expect eQ to start generating revenue in the first quarter of the new fiscal
year."
Market
Impact
We believe that QAD is on the mend, although its financial performance remains
bleak (See Figure 1). There are a number of reasons for this revenue growth
revival. The first reason is the Company's well-established leading global position
in Small-to-Medium Enterprises (SME) and lower-end top-tier segments of ERP
market, with a large loyal customer base and a very dispersed global network
of its offices and indirect channel. Second, QAD is very competitive in speed
and ease of global multi-site implementation due to its global service and support
capabilities. Third QAD has a very tight vertical and vertical sub-segment focus.
Last but not least, QAD was one of the first mid-market ERP vendors to incorporate
concepts of e-Commerce, Supply Chain Management, Customer Relationship Management,
and integration with other vendors' products, which provides QAD with a 'one-stop
shop' capability and an opportunity for sustained future license and service
and support revenue. However, the Company is still faced with the challenge
of concurrently cutting expenses and restructuring while expediting the delivery
of its eQ (formerly On/Q) modules. The eQ product's prolonged and exorbitantly
expensive development have seriously affected the Company's financial performance
during the last two years.
User
Recommendations
We recommend including QAD in a short list in any selection within the following
industries: Automotive, Electronics, Food & Beverage, and Medical. However,
any organization evaluating QAD products should exercise moderate caution and
consider existing functionality only, until the Company regains consistently
profitable financial performance.