BMC to Slash Workforce

 
 
By Lisa Vaas  |  Posted 2003-07-28
 
 
 
BMC Software Inc., stung after a fiscal quarter that saw earnings plummet and losses skyrocket, will slash its workforce by 13 percent, close facilities and consolidate offices, company executives said when the company announced earnings on Monday.

The Houston-based database management tool maker reported first-quarter fiscal 2004 earnings of $6.6 million, or $0.03 per share, which compares to the $0.08 per share it reported at this time last year.

"We are taking quick action to improve our execution and financial performance while accelerating investments in strategic growth areas of the company," said Bob Beauchamp, president and CEO, in a statement. "Although we fully expect the IT spending environment to remain challenging, we are confident that our restructuring actions will allow us to improve our profitability in the second half of our fiscal year."

BMC executives expect that the companys restructuring actions will slash between $25 million to $30 million from operating costs, once the effect of the restructuring savings are fully realized in the March quarter.

The dismal earnings report comes at a shaky time for tool makers, with all of the major database makers—Microsoft Corp., Oracle Corp. and IBM—feverishly working on ease of administration in their respective database updates.

The three are focusing database technology efforts on self-tuning, self-healing and self-management, as well as addressing larger databases that support more users. Thats all territory that encroaches on database tool makers raison dêtre.

"This obviously will have an impact on database tool vendors like BMC, Quest [Software Inc.] and Computer Associates [International Inc.]," pointed out Noel Yuhanna, an analyst for Giga Information Group Inc., in Santa Clara, Calif.

But in the long term, BMC should come out fine, since its been hard at work to churn out unified console technology that supports heterogeneous database platforms that will take advantage of customers installations and their grab-bags of databases, Yuhanna said.

Other details of the earnings report were that BMC suffered net loss on a GAAP basis of $6.1 million, or a loss of $0.03 per diluted common share. Revenues for the quarter were $309.9 million, an increase of 2 percent over the first fiscal quarter of 2003. Total license revenues for the quarter were $107.6 million—a fall of 21 percent compared with year-ago figures. Maintenance revenues were $183.5 million, up 23 percent compared with the year-ago figure. Professional services revenues were $18.8 million, down 4 percent over last year. Operating expenses, excluding $15.6 million of amortization of intangibles, were $321.5 million, compared with $295.1 million a year ago.

The results encompass the operations of Remedy, a BMC company. Remedys revenues were $54.1 million for the quarter, and expenses were $38.7 million, excluding $12 million of amortization of intangibles.

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