Micrografx: Same cover, different book

Summary:In the last three years, Micrografx Inc. has slowly slipped from the public's radar screen.

In the last three years, Micrografx Inc. has slowly slipped from the public's radar screen. Considering how things have gone, that low-profile has probably worked to the company's benefit.

Thanks to Designer, its hot graphics package, Micrografx was once a go-go software maker, well known within the computer industry for its annual sponsorship of a Comdex fund-raiser for missing and exploited children.

The chili cook-off retains its cachet as one of the "must-attend" parties of Comdex, but Micrografx long ago lost its halo. An ill-considered strategy left it with a case of financial indigestion that has since required the urgent attentions of a new management team.

"We've changed direction in a very large way," says CEO Doug Richard, who came to the Richardson, Texas company when it bought Visual Software Inc. in April 1996. Richard replaced Paul Grayson, one of the company's co-founders, as president and CEO in January 1997.

Richard needed some time to get his hands around Micrografx (Nasdaq:MGXI), which was ten times larger than his former operation. The first 30 days "were really awful," Richard recalled.

"I made a mistake every day -- in fact, I was having a good day if I made only one."

But after settling into the job, Richard made his presence felt. He built a sales force that went direct to corporations, abandoning Micrografx's traditional focus on selling primarily at retail. He swapped the company's "personal creativity" software packages, including Creatacard, SnapShot and Windows DrawPrint and Studio, to Cendant as part of a royalty and distribution agreement. At the same time, Micrografx exited the Web graphics business, which Richard calls a "non-starter." These days, the company focuses on a niche, but one he believes has the potential to grow in a graphic fashion: enterprise business graphics. The new Micrografx makes products to improve flow-charting, ISO compliance design, and network architecting, among others.

"Think of it as organization charts on steroids," says Richard, who puts the size of the market at more than $1 billion by the year 2002 -- up from about $200 million currently.

Along the way, Richard found he liked running the company more than his former love, starting companies. When Richard first became acquainted with Micrografx, he viewed it "as the best start-up I'd ever seen." But now that it's maturing, he says, "I can't think of anything I'd rather do."

Renewed interest from Wall Street?
After losing more than $6 million on sales of $64.8 million last year, Micrografx turned things around by finishing with a profit of $607,000 on sales of $71.8 million in its most recent fiscal year. Investors have taken notice, with the stock hovering in the low teens, near its 52 week-high. Although few Wall Street analysts cover Micrografx, one hedge fund analyst thinks this may change.

"(Richard's) completely changed the channels and his customer base," said the analyst, who asked not to be named. "He's done a reasonable job running the race" despite inheriting a company that had little focus. She thinks Richard has Micrografx poised to take off, and predicts that he'll become a cult figure on Wall Street.

What impresses this analyst is that Micrografx has effectively shifted its revenue stream "from 100 percent to zero (in one area) and in the other from zero to 100 percent" in a short period of time.

Micrografx has also sidestepped the industry behemoth, Microsoft Corp.

"Once . . . you develop that sort of high-end expertise, then you're away from what Microsoft is doing and you can just keep ahead of them," says Chris LeTocq, an analyst with Dataquest in San Jose, Calif.

LeTocq finds a huge market for enterprise graphics hard to see, but does think the company can thrive. He compares its course to that of Visio Corp., only in a more specialized vehicle.

While analysts caution that Micrografx still faces challenges, they say the picture is brighter than it's been in a long time. And with Doug Richard having fun in his job, that could bode well for a company once poised on the brink of decline.

Topics: IT Employment, Microsoft, Start-Ups, Windows

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.

Related Stories

The best of ZDNet, delivered

You have been successfully signed up. To sign up for more newsletters or to manage your account, visit the Newsletter Subscription Center.
Subscription failed.