5th April 1999 Archive
Browse by publication date, or search the site.
Will the company seek new management, or a buyer?
Last week's abrupt resignation of Del Yocam as CEO of Inprise (or Borland, as it was when he took over two years ago) still remains a mystery. CFO Kathleen Fisher also resigned at the same time. There are as usual two schools of thought - that he was pushed, or he jumped - but neither fits the facts well. The CFO resignation at the same time would appear to favour the push theory, and suggest there are bad results about to be announced for the quarter that has just closed. The board said it was surprised by the resignations, but this could be part of some private agreement to keep Yocam's reputation as intact as possible, although a prepared resignation statement would be more normal in such circumstances. Forced resignations are more usual when the share price is disappointing. Yocam was previously COO at Apple, and turned Tektronix around. He went to Borland in late 1996 when the financial problems were severe. He stabilised the company with major restructuring and shifted direction towards enterprise software and away from developers and desktop customers. Yocam acquired Visigenic in November 1997, paying $150 million for it, probably using money from an out-of-court settlement with Microsoft because the Redmond gorilla had been poaching key Borland staff by offering considerable golden hellos. It was thought at the time that Gates was getting his revenge on Borland for having humiliated Microsoft with TurboPascal and better Basic in Philippe Kahn's days. In addition, Microsoft was keen that the company's successful Delphi product did not succeed, and that Inprise would not gain market share for its C++. As part of an effort to revitalise the company, Yocam changed the name to Inprise in April 1998, and split the company into two separately-located operations in January this year - Inprise, based in San Mateo and focussing on enterprise software, and borland.com, a Web tools and services operation in Scotts Valley. The name change to Inprise was not very successful, but it is too soon to assess whether the new operational divisions will solve other problems. The splitting move was considered to be a solution to infighting at the company, where morale was lowered by bickering between those working on the traditional products and the new Java-Corba direction. The old hands did not take well to a server-centric world. There were disincentives for Yocam to leave without six months notice. His present contract expired in 2000, with renewal options for up to a further 30 months, with six months notice. He received $2 million on joining Borland and a $2 million housing loan (subsequently waived) to buy a house in Palo Alto. His salary was $360,000 and he had stock options for four per cent of Borland's outstanding stock. Without an agreement with the board, he could lose a great deal if he jumped. It is most unlikely that he was fired for cause. Inprise has a management committee running things at present, which does not look capable of gaining industry credibility in its own right. There seems to be no suitor around at the moment to snatch up the company's intellectual capital, although the share price must make this an attractive possibility. As is usual, the board is denying any intention to seek a suitor. Names that have been mentioned include Sun, but Sun's present need for Inprise does not seem to be very great, especially in view of its role in the AOL-Netscape deal. Nevertheless, at the right price the company could attract the attention of Sun's board. Inprise's more recent Corba area of expertise is likely to attract a suitor that wished to gain a credible entry to the object world. On the other hand, there have been rumours (officially denied) that the company was seeking a buyer for Delphi, its Windows-based development environment, for around $90 million. Certainly financial results have been disappointing, and the share price is languishing at $3.28 after a period around $8 nine months earlier. The fall of 8 per cent in the share price 12 hours before the news hit the wires was probably a profit-taking reaction to a 14 per cent rise the previous day, and unrelated. The immediate future cannot be good: poor results are likely to be announced later this month because of restructuring costs following a 20 per cent reduction of staff in January after the reorganisation, and a write-down of assets to reflect the fair market value. A further bad quarter following the present management upheaval is also likely. The last quarter reported (1998 Q4) showed earnings of $3.5 million on revenue of $48.1 million, although there were several exceptional items, including the sales of some shares in Starfish, Kahn's subsequent company that was sold to Motorola last year. However, the medium term looks good, with a growing middleware market and Inprise well-positioned to take advantage of this. The company is one of the few software developers with Windows, Java and Corba experience. It its true that its future at present is linked to the success of Java, but the company has a strong position as a Java developer. The board has said it is immediately seeking a new CFO, but a decision has not yet been made about whether or how to replace Yocam. In many ways, Inprise looks to be in a similar state to Novell when Frankenberg left. The surgery has been done, and the future could be good again. Looking at Inprise's senior staff lineup, what is missing is an inspirational technology leader. Richard LeFaivre is at present the CTO and has the right technical background (he was previously at Apple as VP in charge of research, strategy and architecture) and the board will no doubt be assessing whether he has the personal qualities to be the new CEO. He would need to give up his extra-curricular activities as a writer and expert witness if he were offered the top job. The Register's take on all this is that Yocam decided, while he was on vacation for several weeks recently, that Borland had reached an inflection point and that a younger technologist was needed to inspire the company. Although this took the board by surprise, the logic of such a decision would have been apparent. It is quite likely that Yocam is not interested in a new full-time position, and would prefer to be on a number of boards as a non-executive director. It also appears that he prefers living in Oregon, as he had been commuting to Palo Alto. As with Frankenberg's resignation, there could also be personal health or family circumstances that are quite independent of the company - an explanation that appears to fit the fact best, especially as it appears that his departure terms are not yet determined. The CFO defection could then be seen as her taking advantage of the opportunity to avoid being there when the bad financial news strikes. ®
Business 05 13:35
The software business is integrating and automating on sand, folks...
The software business was due a wake-up call, but it came from an unexpected direction. The Melissa virus might look like it was all Microsoft's fault, but although Redmond's obsession with integration, automation and Web-enablement was primarily responsible for the speed at which Melissa spread, Microsoft is by no means alone in its ambitions. On the contrary - everybody wants to make it easy for you, and hang the consequences. The way Melissa works is simplicity itself. You open a file you were emailed, a Microsoft Office macro runs, and the email you got is sent on to 50 people in your contact book. So Microsoft's macro security is clearly grossly inadequate, and Microsoft Visual Basic for Applications, which can be used to perpetrate such deeds, seems pretty easy to turn into a runaway train the user has no way to control. Consider the sort of things a virus like this could do and you start to think about Melissa as being pretty cuddly. And the more bits of your data and personal and financial information that get integrated and automated, the more nasty things a virus could do. Sure, it could trash your hard disk, but how about it buying a new car with your credit card and shipping it to Omsk? Maybe your credit card information isn't built into your machine, but on the other hand maybe that just means "secure electronic commerce" hasn't been integrated into your machine yet. The reason we find ourselves standing on the edge of this particular precipice today is because software developers (and as I say, not just Microsoft software developers) think certain features are cool, and that they should try to make things easier for the user. Making it easier generally means progressively reducing the number of decisions the user has to make, and deciding for the user what is best for the user. So you're being dumbed down. But the security holes this process creates can be used by all sorts of different characters, not just those nice people who sold you the software. In the near future, the software industry in general confidently expects, your software will just kind of update itself whenever it needs to and/or there's a new bug-fix or update out. You won't need to know about it, it'll just receive an alert, and next time you look it'll all be much more efficient and snappier (or more likely, puzzlingly fatter and slower). Do we trust the software industry to make this kind of process rock-solid secure? Or more immediately, there are things like these little nagware browser windows that pop up every now and again encouraging you to upgrade to IE 5, Navigator 4.51 or whatever. Click yes to these and you'll go through to the vendor's site and start on a process where something out there helpfully installs files on your machine, optimises your settings and cleans up afterwards. But a growing receptiveness on the part of users to trust whatever it is out there that's monkeying with their machines isn't necessarily constructive; Particularly as the checks and authorisations haven't been keeping pace with the process and are in any event not defences whose security you'd like to stake your life on. And then there's the whole privacy issue, which shows how much the software business' thirst to connect things for a greater good has got out of sync with the rules of the game in the real world. They put in features because they're cool, because they're useful to the vendor, even (stretching it a bit) because they're good for the user, who doesn't want to be bothered with the details anyway. So stuff gets sucked of the machine and sent off somewhere - but where? It's obviously going to get worse, and although with every fresh exposure the software developers will issue fresh patches and promise to upgrade security, there's no obvious way to make the whole shooting match secure in the first place. Stopping doing things in your application development that with hindsight turn out to be dumb is one thing, but the Web itself is quite another. As the years roll by we'll all be downloading and running lots more stuff from the Web, and we're going to know about less and less of it as we do so. So how much longer are the platforms we're using going to be able to cut it? ®
Business 05 14:26
Noises coming out of Redmond suggest the 'let them eat Win98' policy may have been modified
Strange but true - not three months after saying Windows 95 would never be fully Y2K compliant, Microsoft is now telling journalists it's going to issue a Y2K compliance patch for the OS next week. The company's Y2K product manager Don Jones has been quoted on news.com as saying Y2K isn't a reason to upgrade to Windows 98, and that the company is making a commitment to its older platforms. So let's rewind a little there, folks. Back in January we reported (Win95 will never be Y2K-compliant - official) a Microsoft Y2K statement issued the previous day. The statement didn't exactly shower good cheer on users of older Microsoft products, which means anything that isn't the latest version, so much so that we encourage you to read the full thing, which is still up on the Microsoft site. But the highlights of what we presume remains Microsoft policy until such time as a new one gets posted are as follows. "Future Microsoft products will be year 2000 compliant [we're rubbing our hands in expectation over that one, considering the Win98 foul-up]... the company... intends to maintain the year 2000 compliance of many popular products through Jan. 1, 2001. This assurance applies even if newer versions become available." Of these many popular products, the operating systems were NT 4.0, NT 3.51, Windows 98 and Windows 95 (including IE 4.x), but 95 is footnoted as: "Compliance status will remain as 'compliant with minor issues.'" And "compliant with minor issues" is how practically every Microsoft product is listed (and has been listed for months) on the Microsoft Y2K information site. So what is it Microsoft proposes to do with next week's Win95 Y2K patch? It's not clear whether the company is now fixing all of the problems, or just some of them. If it's the former we have a climb-down, and can expect desperate efforts to fix more of the older products rather than just shoo people onto upgrades, whereas if it's the latter, then previous policy is being maintained. But if MS is finally making a determined effort to get real, it's doubtful if it can make it. The company has just put out its Y2K Product Analyser and Y2K Product Guide Workbook, which are intended to help customers address Y2K issues with MS products. But both of these were due to ship two months ago, according to the last recorded sighting. ®
Business 05 16:29
So you think that the PC business is tough? Well its about to get a lot tougher unless you have a business model that is ready for PC’s being resold for $400 (£240). That’s the price that e-machines are selling their PC for, dubbed the E Tower 266, features 32MB of SDRAM, the ATI Technologies' Rage graphics accelerator, 512K level 2 cache memory, 24X CD-ROM, V.90 56K modem and a 2.1-gigabit hard drive. PC buyers can add a 14-inch monitor for $100 more. Intel's response to the sub basic PC sector is to keep CPU prices up by offering integrated motherboards. But the integration they offer means using "soft" modems and integrated sound and graphics. But these look like being poor options and motherboard vendors are already leaving slots on the board to add hardware modem and sound support such as the 8810 chip from Aureal. Intel is better off leaving this sector alone. It does not have a business model that can support sub $100 processors with less than 30% margins. If it keeps chasing it, it will have a lot of very upset shareholders. But without Intel processors the basic PC segment has had to make do with Cyrix parts that offer poor games support, weak floating point and poor MMX implementation. (AMD makes great parts but they are busy competing at the high end with Intel). Until now. Enter stage left is a relative new comer to the processor scene called Rise. (www.rise.com) Unlike other CPU manufacturers Rise makes no apology for not having 400MHz devices. Its focused on making processors for the basic PC segment that run games and multimedia apps without embarrassment. Rise has turned conventional engagement into the CPU business on its head by refusing to take part in pointless benchmarking arguments. Instead they are embracing the e-machines concept with a range of CPU’s complete with reference design platform to enable system builders to offer complete systems at sub $500 levels. Rise argues that at sub $500 (£300) buyers care not a hoot for MHz or PR ratings just so long as they can play Half Life, Quake and watch the Pam Anderson "video" without the picture looking "jerky". They want a good price but not a poor performing machine. We already know that a 266 processor will run Office 97 without a hitch. Thus the Rise processors are getting a name for themselves as the "Processors for the People" – parts, which give performance without apology at, sub $500. It looks like it might be time to cash in Intel shares and keep the cash ready for Rise… ®
Business 05 17:13
Battle of TweedleAMD and TweedleDUM continues
AMD is expected to announce the 475 MHz version of its K6-II processor today, upping the stakes on the battle of the benchmarks. The rumours have been around for a fair while. See, for example, K7 ripped asunder on Japanese site. Last week, AMD claimed that ZD benchmarks were inaccurate and its chips are faster than Intel's Pentium III. This, of course, is a matter for quite some debate... However, the 475MHz K6-II is preparing the way for the K7-500MHz part, already sampling with some system vendors. We're not sure if AMD will bother with those kinds of speeds on the K6-III. And Intel will strike back by lowering prices drastically real soon now. Both Intel's and AMD's results are out shortly. ® NB Thanks to readers who pointed out I got my knickers in a twist over the K6-2 versus the K6-III...sigh.
Business 05 17:22
Adds low voltage version of mobile Celeron, PII too
As expected, Intel has introduced a 333MHz version of its Celeron mobile chip. At the same time, it introduced low voltage versions of its mobile PII and Celeron at 266MHz. The 266MHz parts run at 1.6 volts and use a ball grid array package, slimming down the notebook form factor once more. The 333MHz Celeron mobile has 128K level two cache on the die and costs $159 for the ball grid array package and $214 for the Intel mobile module. That points the way to Intel's packaging in the future on the mobile front. The pricing is aggressive and shows Intel is taking seriously competition from the AMDs, Rises and Cyrix' of this world. Intel will never release a 666MHz processor for obvious reasons, preferring to stay with either 665MHz or 667MHz, when the time comes. ®
Business 05 17:55