Discord surfaces in wake of Inprise restructuring

January 29, 1999 — The latest shake-up at enterprise software and tools vendor Inprise has touched off criticism of the company management’s long-term planning and dented employee morale, according to sources close to the company.

Inprise on Wednesday announced plans to restructure itself into two separate operating divisions, called Inprise and borland.com. The move will involve reducing by 20 percent its global workforce of about 950 employees, Inprise said.

The Inprise division will focus on selling enterprise software, while borland.com will be a Web destination providing software developers with tools and services — including those from third parties — said Inprise, which changed its name from Borland International in April 1998.

This restructuring is an “aggressive and logical step” in Inprise’s effort to transform itself into a major enterprise software company, according to Del Yocam, Inprise chairman and CEO.

However, the move has prompted fears that the tools grouped under borland.com, including Delphi, C++Builder and InterBase, could be discontinued or jettisoned, according to the sources.

The Inprise operation will handle Inprise Application Server, JBuilder for AppServer, AppCenter, VisiBroker, ITS, and Entera, along with professional services.

“Since [Inprise’s] Visigenic acquisition, there’s been a new fervor about CORBA-based products. And Windows, or Microsoft-based technology, has been in disfavor,” said one former Inprise executive. “There was the feeling that if we could sell or get rid of [Microsoft-oriented products], we should. A lot of people in those groups are scared, because they’re not the focus.”

According to one source, Inprise had looked for a buyer for its Delphi Windows-based development environment, reportedly seeking 0 million.

A company spokesperson refuted the rumored sale.

While crediting current management with good tactical ability, former Inprise insiders questioned the long-term strategic vision of Yocam and his team.

“They’ve put all the wood under the Java/CORBA fire. But, there’s no reason to separate Delphi and C++Builder into borland.com, which should be a separate arm from the product groups. Instead, it appears they want the customers of those products, but just to keep them in the portal,” a former Inprise manager said.

The Inprise spokesperson countered that research and development: funding for the tools grouped within borland.com will be unaffected by the reorganization, but that the move was designed to reduce the cost of selling those desktop and Windows-oriented tools, since the decline in that business has negated much of the growth in enterprise software sales.

Inprise will be hard pressed to differentiate its enterprise lineup from other vendors of Java/CORBA tools and application servers, according to the company’s critics.

The upheaval comes as Inprise’s long range fiscal prospects are once again in doubt.

The company announced Wednesday a rise in earnings for the fourth quarter and the 1998 fiscal year, ended December 31, 1998, which included one-time restructuring and acquisition-related charges and one-time gains from stock and land sales. Excluding those amounts, the company reported a fourth-quarter loss and an earnings gain for the fiscal year. Revenues for the fourth quarter and the year of 1998 were down slightly.

Inprise said the results were affected by a delay in shipping a new version of its C++Builder development tool, now scheduled to be available this quarter. Sales were also impacted by a 30 percent decline in Asian revenue due to continuing economic troubles in the region.

Besides reducing its head count, Inprise said the restructuring will streamline its product offerings and increase its operating efficiency. The company also warned that it will incur a “significant” restructuring charge in the first quarter of fiscal 1999, to write down company assets to a fair market value and to pay severance costs.

Further, delayed product roll-outs are expected to curtail revenues during the first several quarters of 1999, according to sources close to the company.

Under the restructuring, the Inprise division will be headquartered in San Mateo, CA, and will be headed by Jim Weil, currently head of Inprise subsidiary InterBase. John Floisand, senior vice president of worldwide sales, will head borland.com, which will remain in Scotts Valley, CA. Both division heads will report to Yocam.

However, the company is rumored to be considering the sale of its Scotts Valley offices, and to be urging many longtime employees whose product assignments fall with the Inprise lineup to transfer to its San Mateo facilities. Such prospects have contributed to the staff’s flagging morale, according to one former Inprise employee.

According to the Inprise spokesperson, the borland.com division will remain in Scotts Valley, though the future of the current facility has not been decided. :END_BODY