How financially healthy were
the major GIS companies for the first three months of 2003, and what does
that say about where we are in this weak economy?
GIS Division Shows Marginal Profit
a look at Intergraph first, the company reported operating income of $4.2
million and net income of $8.1 million on revenue of $120.6 million for
the quarter ended March 31.However, the Mapping and Geospatial Solutions
division squeaked by with a profit of only $200,000, up from $100,000 in
the prior quarter and from break even one year ago.Financial analysts
attending the quarterly conference call were particularly interested in
how the company was going to improve earnings in this division.Intergraph
officials called it a "difficult business" and commented that the company
was not number one in this market.They said that GIS technology was approaching
a saturation point, and that getting into more state and local government
accounts was difficult because that market was being hit hard by decreasing
tax revenue.Going forward, they said that they would focus on the services
business to look for more revenue.
general, however, Intergraph officials said they were in a strong cash
position but that they felt their stock had some built in premium due to
the cash position they hold with respect to settlements with Intel in their
intellectual property suit.From their perspective, they have engaged more
potential clients this quarter that were interested in making investments
in Intergraph technology, but it was too early to tell.They saw signs
of improvement in the number of sales opportunities but they have not translated
in Recovery Mode after Purchase of Thompson Associates
reported revenues for their second quarter of fiscal 2003 of $27.1 million
compared to the $20.9 million reported in the first fiscal quarter of 2003
and $23.5 million reported for the same quarter last year.Included in
the revenue number was $3.3 million derived from Thompson Associates, which
MapInfo purchased in early January.Overall, MapInfo reported an operating
loss of $1.5 million, which included $1.7 million in severance and restructuring
charges.Net loss was $742,000.Overall, MapInfo reported that 44% of there
revenue was generated from products, while 33% of revenue was generated
from data sales.
Cattini, CEO, stated that they hoped to return to profitability in Q3.
They noted that during the quarter, they had 76 transactions of more then
$50,000, a substantial increase from the previous quarter.
With the Thompson Associates acquisition, MapInfo was looking to focus
on 'predictive analytics', which, semantically, is a change from what they
were previously calling Analytical CRM (or aCRM; see our interview
with aCRM VP Kevin Antram).
indicated that AnySite, a site selection solution picked up in the
Thompson acquisition is now packaged with MapInfo data and a new online
version is coming available shortly.It was noted that the Telecommunications
sector, battered by the stock market and one in which MapInfo had a heavy
reliance for revenue, saw a 22% increase in sales, the first growth they
have seen in five quarters.In general, Cattini was looking toward a more
balanced revenue mix.
in Data Quality/Geocoding Industry
the quarter Group 1 Software (NasdaqNM:
acquired rival Sagent Technology.The two companies provide data quality,
validation, and geocoding services.Group 1 will absorb Sagent's Centrus
product line of geocoding software.Group 1 said it would meet revenue
forecasts of full year revenue of approximately $102 million that will
be released on May 12th.
A Growing Business?
Geo Technologies Inc., a wholly owned subsidiary of Stewart Information
Services Corp.(NYSE: STC) was formed from
the consolidation of Landata Group Inc.(a former subsidiary) and the acquisition
earlier this year.In March, this new company acquired Citipix
from Eastman Kodak.In its most recent quarterly report
released April 25th, Stewart reported all-time record revenues of $441
million for the quarter compared with $348 during Q1 2002. Stewart
provides title insurance and related information services through more
than 6,400 issuing locations in the United States.
data companies such as GDT, Tele Atlas, and Navigation Technologies are
all privately held.However, all are battling heavily in the telematics
marketplace, which can not be fairing much better than the LBS market.
LBS has been put on the back burner while the wireless carriers figure
out how to make money from location services.
what does this all mean? For Intergraph, it is clear that their
GIS business is at or near a break-even point, able only to turn modest
profit for the last few quarters and indicating that its focus on the local
and state government market was not producing strong financial results.
Resistance from ESRI, which is firmly entrenched in this market, is not
a new problem for management to handle.They have been butting heads in
this arena for years, and in a saturated market, there is just not that
much market share to lure away.The company, however, has had recent successes
in Asia for both GIS and Utility solutions.However, to spur growth, it
is unlikely that any kind of shakeup at the company, in either management
or product direction, or acquisition, that would add revenue to its bottom
line, will occur before a replacement is found for retiring CEO Jim Taylor.
they seem to have a bit of an identify crisis.Is it a solutions company
or a product software company? Can it be both? The acquisition of Thompson
Associates was a clear indication that they want to be a solution company
and bolster support for the business sector in which they have been successful
traditionally, namely in the business geographics marketplace of retail
and real estate.However, with 44% of their revenue still being generated
from software, it may be a tougher sell to convince customers that they
are not just pushing product.Even more so, where does that leave business
partners who make their money selling MapInfo solutions and services? Will
this not continue to create more channel conflict? On the positive side,
MapInfo seems to be turning the corner by reporting better revenues from
the telecommunication sector and an increase in business in the public
sector market, which has not always been a focus for the company.Financial
analysts have also turned more upbeat in recent weeks, with First Call
offering a more positive slant on earnings potential going forward.This
has apparently influenced investors which have bullishly pushed the stock
from under $3.50 in early March to a close of $6.51 yesterday.
as a private company, ESRI does not report revenue numbers.But
the IT business in general has been hurt by the economy, and the local
and state government market sectors, ESRI's bread and butter, in particular.
With so many public entities facing budget shortfalls, GIS spending across
the board has likely affected the market leader as well.We'll have the
numbers from Autodesk and other companies later in the month.