XML technology company Software AG has set its sights on maintaining revenue this year after two years of decline that have left its revenue 28.2% below the level in 2001. But having cut the workforce by 12% to 2,577, the company is looking for a significant improvement in operating income.
The Darmstadt, Germany-based company reported net income of 163,000 euros ($210,270) for its fourth quarter to December 31, down from income of 16.1m euros ($20.8m) on revenue 2% down at 117.8m euros ($151.9m). For the year, it made a loss of 3.3m euros ($4.2m), down from income of 33.5m euros ($43.2m) on revenue 11% lower at 422.2m euros ($544.6m).
The revenue decline is not as serious as the figures suggest because it indicates a deliberate policy of getting out of low-margin activities as part of a major reorganization of the company that followed Karl-Heinz Streibich’s appointment as CEO last year.
While licensing revenue declined 8% to 104.3m euros ($134.5m), there was a 22% decline to 124.3m euros ($160.3m) in revenue from professional services. Due to pressure on service margins, the company said that it concentrated on larger, more challenging projects.
Streibich said customers had made it clear they needed to modernize their enterprise IT systems, rather than invest in complex and often inadequate new applications. He said that investment protection and integration ranked highly among the concerns of IT decision-makers and Software AG had demonstrated it can address these issues.
This article is based on material originally published by ComputerWire