Firm cans 10 products and lays off 10% of staff

Self-styled Responsive Process Management firm Progress Software is in the dog house – despite a new CEO its latest financial results have led to some serious soul searching. The result of that strategic review, conducted internally but also with the help of J.P. Morgan, is the sale of 10 non-core products and reportedly headcount reductions of up to 15%.

CEO Jay Bhatt said the review took five months, and the conclusion was that the firm needs to keep its feet on the ground but get its head in the clouds. Specifically, it will continue to invest in as well as ‘cloudify’ what it now calls its core products – the OpenEdge, DataDirect Connect and Apama Analytics and Decisions products.

Pretty much everything else is getting the heave-ho by the middle of 2013 at the latest, and the list of things that are non-core makes surprising reading. The ten products for the chop are Actional, Artix, DataXtend, FuseSource, ObjectStore, Orbacus, Orbix, Savvion, Shadow and Sonic.

Actional was the SOA management kit Progress bought for $32m in 2006. It bought the business process management (BPM) firm Savvion for $49m in January 2010, and made it a key element in its Responsive Process Management strategy. It bought Artix and Sonic with the acquisition of IONA for $162m in 2008; the less said about the other products on that list, the better.

Anyway Bhatt said everything will be fine once the plan is executed. “Valuable analysis, market feedback and lessons learned from previous product strategies helped inform our view and we fully intend to evolve Progress into a leaner company that will help to lead the computing evolution from on-premise to the Cloud. The Board and I are confident that Progress has the right DNA, scale and experience to make this transformation successful for the benefit of all stakeholders.”

Shareholders in particular will be felling a little bruised by Progress’ recent, er, progress (and yes, it did unfortunately trademark the term ‘Business Making Progress’.) On the announcement of its rather poor first quarter (revenue down 7%, operating and net income both down around 40%) its stock fell 40% in a day.

Perhaps realising that its shareholders’ patience has already worn thin, the firm also announced a stock repurchase worth $350 which could help the shares regain a little ground.

As for the ‘cloudification’ of its products, that essentially involves adding cloud hooks to its DataDirect connectors. With its Apama Analytics and Decisions technology – which is fundamentally an event processing engine – it will strengthen its capital market focus (where it started life) and enable application analytics in the cloud, as well as launch a real-time analytics cloud service.

You’ll notice the biggest survivors from all this shake-up are the OpenEdge 4GL development language aimed at ISVs – which was home-grown and how Progress made its name in the first place – DataDirect, and Apama.

It bought Apama for just $25m in 2005 – Apama was founded in 1999 by two Cambridge doctorates: Dr Giles Nelson and Dr John Bates. Interesting that for all the money Progress spent over the years on acquisitions, only two look to have made it – DataDirect and Apama – and one of those isn’t even native to Progress’ US heartland. Perhaps Nelson and Bates should have a crack at running the company?

Source:http://www.cbronline.com/blogs/technology/progress-software-off-to-an-annus-horribilis03052012

Progress Software (NSDQ:PRGS ) Corp. will divest itself of 10 product lines and lay off between 10 and 15 percent of its global workforce as the company focuses on its application development and deployment software, the company said Wednesday.

The new direction for the software company follows a five-month evaluation of the company’s product portfolio, business model, capital allocation strategy, customer base and future opportunities, the company said. President and CEO Jay Bhatt launched the review when he joined the company in December.

Progress also will spend $350 million to repurchase its own stock during the current fiscal year and fiscal 2013 in an effort to increase shareholder value.

“Progress pioneered the creation of application development and deployment infrastructure tools, technology and software,” Bhatt said in a statement. “Our new strategic plan is firmly rooted in this foundation and is designed to significantly improve Progress’ growth and performance. With our refined focus on providing advanced, leading-edge application development products and services to customers, we are confident that we will enhance value for all shareholders.”

The moves are designed to help reverse a steady decline in sales and profitability Progress has recorded in recent quarters. In the fiscal 2012 first quarter ended Feb. 29, Progress reported revenue of $124.4 million, down 7 percent from $134.2 million in the same period one year earlier. Net income dropped 64 percent to $11.9 million from $28.3 million one year ago.

Progress has some 2,000 partners worldwide and the channel accounts for 70 percent of the company’s sales.

The company will unify the capabilities of what it has identified as its core products: OpenEdge, the Progress Arcade portal, DataDirect Connect, and Apama Analytics and Decisions. That will create what the company described as “a next-generation, context-aware” development and deployment platform for cloud applications.

Progress will invest in sales, marketing and strategic product development for OpenEdge and the Progress Arcade portal; rejuvenate the DataDirect Connect database drivers by expanding the product portfolio, investing in new channels, establishing an online presence and launching a cloud connect service; and strengthen the capital market focus around Apama Analytics and Decisions and launching a real-time analytics cloud service.

The 10 “non-core” products Progress will divest are Actional, Artix, DataXtend, FuseSource, ObjectStore, Orbacus, Orbix, Savvion, Shadow and Sonic. Those products accounted for $172 million in sales in fiscal 2011, Progress said.

The company did not detail how it intends to divest itself of those products, but it did say it expects to complete the divestitures by “the middle to end” of fiscal 2013.

The workforce reductions and other cost-cutting efforts will reduce run-rate costs by around $55 million gross or $40 million net after additional investments by the end of fiscal 2012, Progress said. Along with cutting 10 to 15 percent of its workforce during this year’s second and third fiscal quarters, the company will consolidate facilities and implement “a simplified organizational structure.”

Source:http://www.crn.com/news/applications-os/232900980/progress-software-to-divest-10-product-lines-cut-workforce-by-10-15-percent.htm;jsessionid=qzk2n8Rb2STzKuAKT22FeQ**.ecappj02

Business software maker Progress Software Corp posted a lower first-quarter adjusted profit, hurt by lower software license revenues.

The company posted net income of $7.5 million, or 12 cents a share, compared with $20.5 million, or 29 cents a share, a year ago.

Revenue fell 7 percent to $124.4 million. Software license revenue for the quarter fell 19 percent.

Excluding items, Progress Software earned 28 cents a share, compared with 42 cents a share, a year ago.

Separately, the company said its Chief Financial Officer Charles Wagner will leave the company effective immediately. Chief Executive Jay Bhatt will assume Wagner’s duties in the interim.

“Wagner’s departure is not based on any disagreement on any matter relating to the company’s accounting practices or financial statements,” Progress said in a statement.

The company said it will not provide outlook due to ongoing evaluation and forthcoming announcement of the company’s revised business plan.

Shares of the company closed at $24.40 on Tuesday on the Nasdaq.

Source:http://www.reuters.com/article/2012/03/28/progresssoftware-idUSL3E8ES6EH20120328