Working on a Sequel
Chairman John Chen last Tuesday opened what he called "chapter two" in the life of Sybase, one of the original pioneers of database systems that keep track of relationships between the statistics and content they store.
He marked the occasion by moving his software company to the New York Stock Exchange, where its stock now trades under the simpler symbol of SY. In his mind, the move sets the company apart. Not just any technology company and certainly not your run-of-the-bankruptcy-docket dot-com can make it onto the Big Board. Thats reserved for well-capitalized, reliable generators of cash.
Of course, Chens crew will now be in the company of such icons of American capitalism as AT&T, Ford Motor, General Electric and General Motors. You be the judge of how reliable some of those names are at generating more cash than they use up, gaining market share and burnishing their brands.
But the point remains that getting your stock listed on the NYSE tends to connote that you are a sound company, on solid financial footing. "Blue chip" is the legacy term.
Right now, no one can be enjoying this connotation any more than William R. Johnston, the president of the New York exchange. For pretty much all of the Internet bubble, the NYSE was derided as an anachronism where heavens! human beings still executed trades. The hot haven of new technology and technology companies was the Nasdaq and the future was electronic trading systems.
So far this year, five technology companies, including BMC Software and E*Trade Group, have "defected" from the Nasdaq to the NYSE. In the past three years, 128 companies have left other exchanges, primarily Nasdaq, for the NYSE. Only one company has left the NYSE. Pretty good average. Even Shaquille ONeal doesnt dunk that well.
That Sybase can get on the NYSE at all sends the message that Chen wants. Sybase has been through the wringer. That it is financially sound enough to switch must almost seem miraculous to Chen, who has been reviving the company for the past three years.
From 1995 to 1998, the company was a consistent loser, dropping $250 million. Chen has had to fight through layoffs and an accounting scandal in Japan. Hanging over all this, the company knows it will never really overcome a costly mistake: licensing its database technology to Microsoft in 1988. Now, its the boys in Redmond, not Sybase, who are making hay with SQL Server. A decade ago, Sybase still had a shot at duking it out with Oracle in providing the software that lets companies keep track of their customers, interact with them and sell to them. Oracle is 80 times larger than Sybase and the gap is growing.
That means Sybase has had to find a new niche in software. The database war is over, and Sybase lost. Otherwise, Chen probably wouldnt even be chairman.
So Chen wants Sybase software to be a platform, the basis for companies to set themselves up as e-businesses. Sounds a lot like IBMs ambitions: Provide the glue that allows companies to pull together all their existing, large-scale applications and make them work together.
To get going, Sybase is concentrating on three areas that it wants to dominate: the mobile exchange of data, heavy-duty financial software and electronic commerce "infrastructure." But Chens attempt to remake Sybase still has a long way to go. Revenue from its database software accounts for two-thirds of its $230 million or so in quarterly revenue. Next year, he hopes to generate half of the companys revenue from new sources. But Sybase has already warned that revenue this year is falling behind expectations, showing it is not immune to the technology downturn.
Thats why getting your company listed on a stock exchange whether its the American Stock Exchange, Nasdaq, NYSE or whatever comes next is not really a goal or even a milestone. Its just another starting point in a game that never ends.