Firm cans 10 products and lays off 10% of staff
Self-styled Responsive Process Management firm Progress Software is in the dog house - despite a new CEO its latest financial results have led to some serious soul searching. The result of that strategic review, conducted internally but also with the help of J.P. Morgan, is the sale of 10 non-core products and reportedly headcount reductions of up to 15%.
CEO Jay Bhatt said the review took five months, and the conclusion was that the firm needs to keep its feet on the ground but get its head in the clouds. Specifically, it will continue to invest in as well as 'cloudify' what it now calls its core products - the OpenEdge, DataDirect Connect and Apama Analytics and Decisions products.
Pretty much everything else is getting the heave-ho by the middle of 2013 at the latest, and the list of things that are non-core makes surprising reading. The ten products for the chop are Actional, Artix, DataXtend, FuseSource, ObjectStore, Orbacus, Orbix, Savvion, Shadow and Sonic.
Actional was the SOA management kit Progress bought for $32m in 2006. It bought the business process management (BPM) firm Savvion for $49m in January 2010, and made it a key element in its Responsive Process Management strategy. It bought Artix with the acquisition of IONA for $162m in 2008; Sonic was home-grown; the less said about the other products on that list, the better.
Anyway Bhatt said everything will be fine once the plan is executed. "Valuable analysis, market feedback and lessons learned from previous product strategies helped inform our view and we fully intend to evolve Progress into a leaner company that will help to lead the computing evolution from on-premise to the Cloud. The Board and I are confident that Progress has the right DNA, scale and experience to make this transformation successful for the benefit of all stakeholders."
Shareholders in particular will be feeling a little bruised by Progress' recent, er, progress (and yes, it did unfortunately trademark the term 'Business Making Progress'.) On the announcement of its rather poor first quarter (revenue down 7%, operating and net income both down around 40%) its stock fell 40% in a day.
Perhaps realising that its shareholders' patience has already worn thin, the firm also announced a stock repurchase worth $350 which could help the shares regain a little ground.
As for the 'cloudification' of its products, that essentially involves adding cloud hooks to its DataDirect connectors. With its Apama Analytics and Decisions technology - which is fundamentally an event processing engine - it will strengthen its capital market focus (where it started life) and enable application analytics in the cloud, as well as launch a real-time analytics cloud service.
You'll notice the biggest survivors from all this shake-up are the OpenEdge 4GL development language aimed at ISVs - which was home-grown and how Progress made its name in the first place - DataDirect, and Apama.
It bought Apama for just $25m in 2005 - Apama was founded in 1999 by two Cambridge doctorates: Dr Giles Nelson and Dr John Bates. Interesting that for all the money Progress spent over the years on acquisitions, only two look to have made it - DataDirect and Apama - and one of those isn't even native to Progress' US heartland. Perhaps Nelson and Bates should have a crack at running the company?
Please follow this author on twitter: www.twitter.com/jasonstamper