Borland Software is flogging its JBuilder, Delphi, C++ and C# business while buying Segue Software, in a strategy to reverse corporate losses by focusing on software performance instead of development.

Borland, which saw revenue from sales of its software drop by nearly a quarter during its fourth quarter and for the year, said on Wednesday that it is looking for a buyer for its Java and Windows integrated development environment (IDE) business.

The company, which was once a market share leader in Java tools and second only to Microsoft on the Windows platform, is buying Segue in a $100m cash transaction. Segue, a Borland partner, provides software quality and testing tools.

Borland's recently recruited chief executive Tod Nielsen said in a statement the move is a "natural extension of our focus to expand beyond development and into software delivery"."

Both the divestiture and acquisition were announced as Borland published its latest fiscal losses. Borland recorded a $9.5m loss, down from a $7.9m profit, for the three months to December 31, 2005, on revenue that dropped 13.9 per cent to $71m. Borland reported a loss per share of $0.13.

For the full year, Borland reported a $28.4m loss, down from a $11.3m profit, as the company's revenue slid 10.5 per cent to $276m. That worked out at a loss per share for Borland of $0.37 compared to a profit in 2004 of $0.14.

Licensing from Borland's software dropped 24 per cent to $42.2m during the fourth quarter and 23 per cent for the full year to $163m.

Borland has been badly hit by the rise of "free" software tools, notably the open source Eclipse Foundation. Eclipse has gone from strength to strength since 2001, to today number 115 member companies with more than 500 Eclipse-based plug-ins available for developers to mix-and-match inside their Eclipse IDEs.

Eclipse has proved popular because it has vastly reduced the amount of engineering work required by companies to simply build and update IDEs, while promoting greater interoperability between tools that use the Eclipse framework.

Pre-Eclipse, companies like Borland would undertake this engineering work and then charge developers for the right to use their "quality" closed-source tools.

The decision to buy Segue combined with exiting the IDE market, shows Borland has decided to focus its attention future up the application lifecycle management (ALM) chain, on testing and performance management - already elements of the Borland portfolio - and to leave the messy business of actually assembling code to others.®

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