On the heels of bad financial news, rumours are circulating that database and tools vendor Sybase is the target of a takeover by IBM or Computer Associates, according to a report in US-based InfoWorld.
Sybase Australia managing director Gary Jackson dismisses the reports. "And there is no truth to the rumour we are about to buy CA," he joked. As part of its restructuring, there are reports that Sybase intends to cut back on some of its ongoing developments.
While not confirming this report, Jackson says such a move would probably make sense, especially if the company cuts back on the number of platforms it supports, and focuses instead only on major platforms.
"For instance we could cut back our gateway availability and make virtually no difference to our revenues and still make a big difference to our profit because of reduced engineering and product support costs," he said.
Acquisition rumours began circulating as early as last year, when Sybase began having financial difficulties. Those rumours were rejuvenated after Sybase announced it post a $US24 million second-quarter loss and will lay off about 600 employees - about 10 per cent of its workforce. This follows a first quarter 1996 loss of $6.9 million - which spurred a top management shake-up and salesforce overhaul - and spotty financial performance last year.
Some financial analysts shrugged off the acquisition reports because IBM and CA have invested heavily in their own database wares. They note, however, that Sybase is suffering under intense competitive pressure from database market leader Oracle, as well as from Informix Software and Microsoft.
"You've got Oracle, Informix and Microsoft investing in sales people and technology to drive into the market, and then you have Sybase, which is cutting sales people and expenses," said Marshall Senk, financial analyst at Robert Stephens and Co. "The timing for them couldn't be worse.
The bottom line is that [other vendors] are going to take some of Sybase's marketshare."