Inprise: Is former Borland living up to its new name?

The new moniker -- Inprise Corp. -- hardly rolled off the tongue. What's more, it was devoid of any association with the company's charismatic founder, Philippe Kahn, and the software maker's heady days as a self-declared "barbarian" ready to storm the gates of arch-enemy Microsoft.

But that was exactly the meat of the matter -- the company's new chief executive, Delbert Yocam, wanted to draw a sharp demarcation between what the company was and what it had become.

Inprise (Nasdaq:INPR), a company focused on making developer tools, was far removed from its roots -- and considering its recent history, that's probably a good thing.

Instead of struggling for a piece of a database market that Microsoft virtually owns, Inprise has carved out a defensible niche, reeling off profits in three of its last four quarters.

"Del has done a fabulous job at Inprise, getting them healthy again, getting them back on their feet," said Dave Kelley, an analyst with the Hurwitz Group. "It's now in a position where people in the industry are starting to take Inprise seriously again."

In Inprise's second quarter, ending June 30, the company earned nearly $2 million on $46 million in sales. Compare that to a year ago when the company lost more than $2 million on revenues of $48 million.

Cleaning up the mess
The woes of Borland/Inprise, which makes software development tools, began with the 1991 purchase of database maker Ashton-Tate.

The move was intended to build out the company's product line in the face of competition from Microsoft Corp. and Lotus Development Corp.

But it turned out to be a monumental disaster. The acquisition diverted management's attention and Borland lost its focus just as Microsoft was stepping up the pace.

"I had known Borland from when it was in third place behind Microsoft and Lotus, and I knew that they had great products and great people, with poor management and poor marketing and sales," Yocam said. "Over the last five years [before Yocam stepped in] they had had declining revenues and losses.

"When I got the call, it was a last ditch effort to keep the company afloat," he continued. "I knew what I was up against -- they had cash only for another three to four months, and then it would be over with."

Yocam, an operations specialist who had already played turnaround artist at Tektronix Inc. in the early 90s, honed his craft after years as Apple Computer Corp.'s chief operating officer.

He arrived on the scene at Borland in December of 1996 and moved ahead with the classic turnaround strategy: Strip the company of everything but its core business, stop the bleeding, and put together a solid strategy for new products and growth.

In the case of Borland/Inprise, that meant laying off 300 employees -- 30 percent of the workforce -- plus almost completely replacing the top management and redirecting sales efforts from individual developers to enterprises.

"It isn't like they were in the shampoo business and decided to go into the baked beans business," said Evan Quinn, director of Java research for International Data Corp. "But certainly, for the software industry, this was a pretty big move -- and they pulled it off, to their credit."

The picture is, of course, not quite that simple. The way that Inprise's brass paints it, the company was already eyeing the enterprise applications market. It's a choice, corporate segment of the computer business with fat profit margins and an arena where Microsoft doesn't -- at least, not yet -- dominate. Yocam, 54, had the credibility and the track record to push the strategy through.

Drastic measures for drastic times
"Even before he got here, they knew they had to do something," said Zack Urlocker, vice president of marketing. "The strategy was not working with the desktop. They had begun to look to the enterprise as a possibility for the future. But it was a limited effort. There was no direct sales force, no consulting or support."

Under Yocam, Inprise has been building out its staff with an eye toward the enterprise. The result, according to Inprise: 73 percent of its revenues come from enterprise business, up from 10 percent three years ago.

Analysts also say Yocam helped create a sense of greater stability with his declaration that Inprise would ship a major upgrade or new product every quarter.

If Yocam makes good on that promise, it would bring a sorely needed element of rationality to the company's earnings.

Another good move was buying Visigenic Software Inc., a maker of Object Request Broker technology, observers said. The February 1998 purchase gave Borland a top-notch set of development tools, and the impetus for changing the company's name to Inprise.

The $64,000 question
But Inprise still must answer lingering questions. Competition in the enterprise arena is fierce -- and Microsoft, as always, is pushing hard to make up for lost time.

"The application server market is developing very quickly. Some of [Inprise's] competitors are shipping products that they are not," said Michael Gilpin, a vice president with Giga Information Group. He pointed out that Inprise has been slow in shipping its application server.

Gilpin was also somewhat dismayed at the departure of Inprise Chief Technology Officer Roger Sippl in late June.

"There's no question that Roger is a very influential person in Silicon Valley -- the fact that he's gone is slightly negative, on balance," Gilpin said. "Continued management changes are always a concern when executing a turnaround."

Although Inprise is heading in the right direction, company watchers say it's too early to declare a 100 percent bill of health. It's a volatile industry, and Inprise could still tank, they say.

Gilpin, for example, is advising his clients not to enter into long-term agreements with the company until it is on stronger footing.

Yocam has said from the outset that the turnaround would take eight quarters. The CEO now says the economic crisis in Asia may delay that goal for another two quarters. But a successful entry into enterprise applications development will be worth the wait.

"The marquee names of the past are not necessarily those of the future," Yocam said. "[Distributed object technology] is the third wave of enterprise technology. When you really look at the potential, we're talking about billions of dollars."

If Inprise can get a piece of that, nobody will care what the company's named, and Inprise might just come out smelling like a rose.