US software companies sight rebound

Nicole Volpe

NEW YORK: A raft of software companies said on Thursday that they see early

signs of a rebound, as some businesses have slowly started spending money on

everything from Web site management to giant corporate databases.

Analysts said the latest earnings posted by software companies were a relief

after the rout in the September quarter -- when corporate customers stopped

making deals in the wake of the Sept. 11 attacks on New York and Washington.

"I think in general it's been good," said SoundView Technology

analyst Gary Spivak, about the latest quarter. "September was just such a

weak quarter that business has invariably been pushed into the December quarter

making it a little easier."

The bigger players in software have fared better, raising their outlooks for

the year ahead, analysts said. "It seems like it's the bigger vendors that

are doing well," said Goldman Sachs analyst Chris Debiase, adding that some

smaller companies had positive financial reports as well.

He named two giants -- Siebel Systems Inc., which makes software that helps

businesses sell more efficiently to customers, and Germany's SAP, which makes

software that automates everyday business operations such as payroll and human

resources -- as having pleased investors this week.

"Investors are applauding folks that put up strong numbers and raising

guidance, like your Siebels, SAPs and Mercury Interactives," said Brendan

Barnicle, analyst at Pacific Crest Securities.

"2001 is over"



Some software vendors, however, reserved judgment on prospects in the year
ahead.

Business-to-business software maker i2 Technologies did not give a detailed

outlook. Business automation software company PeopleSoft Inc. did not boost its

outlook, even as it posted fourth quarter profits that beat financial targets on

the strength of its revamped business automation software.

"Rivals PeopleSoft Inc. and i2 I would put in the 'in line' camp,"

he said, referring to the other large business vendors. "The numbers came

in as expected but they didn't raise guidance, which will probably disappoint

investors given the good news from Siebel and SAP," he said.

PeopleSoft chief executive Craig Conway told analysts that he didn't yet see

evidence of an economic recovery and was not basing his 2002 growth forecast on

the assumption that the business climate would improve. Morgan Stanley analyst

Chuck Phillips said PeopleSoft chief executive Craig Conway's outlook stood in

sharp contrast to "Siebel's unbridled optimism."

On Wednesday, Siebel said fourth-quarter profits fell 17 percent from a year

earlier, but that it sees earnings and key revenues growing in 2002. During a

conference call on Wednesday, the company's Chief Executive Tom Siebel said,

"2001 was a challenging year for all of us ... The good news is that 2001

is over."

BMC Software Inc., whose products help manage computer systems, said it saw

an improvement in its just-ended fiscal third quarter versus the second quarter.

BMC met guidance it raised earlier this month. However, the results were still

far below the same period last year.

Additionally, BMC Software Chief Executive Bob Beauchamp said he expected the

overall sluggish technology spending environment to continue and did not issue

guidance for the upcoming year because of the uncertain economic environment.

No certain recovery



Documentum Inc., a maker of software that manages how text, photos and video are
called up on Web sites, said it had landed a number of large deals during the

quarter.

"We saw evidence in the last quarter of a greater number of closed

transactions, and an increased number of competitive wins," Chief Financial

Officer Bob Corey said in a conference call with analysts. He added, however,

that the larger number of deals did not indicate a certain rebound.

"We continue to be conservative about the prospects for a rapid recovery

during 2002," he said. Documentum on Thursday posted a

narrower-than-expected fourth-quarter loss, and said it expects to return to

operating profits by the second quarter of 2002. The company also raised its

guidance for the full year 2002.

Documentum rival Interwoven Inc. chief executive and President Martin Brauns

also said he was "guardedly optimistic" about the sector. "We

felt less pricing pressure at the end of the fourth quarter than we did in the

end of the third quarter," said Interwoven chief financial officer Dave

Allen, adding that he sees less uncertainty from businesses about their budgets.

"We believe we have seen a bottom," Brauns said in a phone

interview after fourth-quarter results. "Certainly, we are seeing

stabilization. Our Wall Street guidance reflects that we do see a rebound later

in the year."

Database software supplier Sybase Inc. posted fourth-quarter earnings that,

excluding hefty merger-related write-offs, topped Wall Street expectations by a

wide margin amid growing business in Asia. Sybase, a provider of big business

databases targeted at financial services and mobile telecommunications

companies, reaffirmed its financial outlook for the current first quarter and

boosted its profit outlook slightly for full-year 2002.

Focus on promising industry sectors such as financial services and mobile

communications markets, especially in fast-growing China and Korea, were behind

Sybase's strength.

"We are not only very profitable but we have strong cash flow and we

seem to be growing in multiple sectors and different geographies," chairman

and CEO John Chen said, adding that this was Sybase's 15th profitable quarter in

a row.

(C) Reuters Limited.