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.