A Look at the GIS Side of Intergraph’s Q1 Results

By Adena Schutzberg

Intergraph has always been a tough company to track since the company supports products and services outside of the GIS market.But now Intergraph has set up each division as a business segment and reports earnings by segment.Also, in the conference call, CEO Jim Taylor spoke about each segment individually.Here are some of the highlights with respect to GIS.

IPS (Intergraph Public Service) includes software and services aimed at utilities, telecommunications, and public safety.The division was about $2 million under planned revenue for the quarter.The segment did achieve just over $1 million in operating income.Taylor suggested that IPS would not be impacted directly by the general economic slowdown.He did say that telecommunications would be impacted by dotcom demises and lower priced bandwidth.Still, he feels that Intergraph customers tend to be large players who should weather the storm.

IMGS (Mapping and GIS, including GIS products and services) had a "great Q1" with over $3 million in operating income on $24 million in revenues. Taylor did describe IMGS as the most challenging business in 2001.The segment is still restructuring in the US and overseas as a vertical business and will host their first User Conference in June.The highlight of the quarter in terms of contracts was a pair of LARIS contracts (Land information systems for Russia) which involve both software and services. Two issues will lower Q2 expectations - late payments from the US government from Q4 2001 and early delivery of software for LARIS.

There were many other topics covered that provide further insight into Intergraph's overall direction.

Hardware maintenance is now under Intergraph Government Solutions (IGS), and will continue to support other non-Intergraph hardware, too.The group is looking to do more outsourced work, especially for government clients.

The lawsuit continues with Intel.Intergraph is hesitant to say how much income this may produce, but is optimistic.

Intergraph has closed on its sale of several products to Bentley. Intergraph currently owns 33% of that company.Taylor suggests that he expects -- and encourages -- Bentley to try an IPO to increase shareholder value.Taylor explained that the three engineering/imaging products sold were not part of Intergraph's core business.Bentley had competitive products, but with the purchase, now owns all of that space.Taylor went on to say that without competition, Bentley should bring in more profits. This, Taylor thinks/hopes, might encourage Bentley to move forward with an IPO.

Intergraph was questioned on the competitive situation in GIS/Mapping.In response, Taylor says the company is focusing on high end mapping (production, government mapping agencies); and on the lower end (municipal, commercial), they are more services-oriented (client/server enterprise work).Taylor suggests that Intergraph is a more a service-oriented company rather than a product oriented company like ESRI. On Smallworld, he claims, "they've become invisible" and notes Intergraph has "seen less of it" which he explains in part as being due to the changes under new owner, GE.In recent bids, he notes, Intergraph has come out strong against Smallworld.

All VPs are on incentives tied to profitability.

The conference call is available on the Web until the end of May.

© TenLinks.com

Published Saturday, May 5th, 2001

Written by Adena Schutzberg

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