Intentia's Results: Not An On-Coming Train, But Light At The End Of The Tunnel

ARC's analysis of Intentia's annual results indicate a tough year, but a year in which Intentia made great progress towards ensuring its long term viability. For the 2003 European market, 130 new customers is a fair achievement for an ERP supplier, although in 2002 Intentia did pick up over 200 new customers. A 20% head count cut and the Symphony investment probably ensures independence in the mid-term, and Intentia is sensibly focused on sectors such as food & beverage, fashion, and paper/steel mills, to which it brings a useful maintenance management product.

Convert Intentia's results into US dollars at year end rates, and overall 2003 was flat with total revenues down 3% to $404 million, and license revenues were down 16.5% to $122 million. However, in local currency, the picture looks rather worse with total revenues down almost 20%.

Scandinavian license revenue, which represents 42% of total license revenues and in which Intentia is dominant amongst mid-market manufacturing, subsided 12%. In Northwestern Europe, mainly UK and Benelux, license sales dropped 11%, because UK customers delayed purchases. In Central Europe e.g., Germany and Poland, license sales sank 5%, affected by a weak German economy and the strength of SAP, but probably enhanced by European manufacturing moving to Eastern Europe.

In Southern Europe mainly France, Italy, and Spain, licenses plummeted 22% - its always difficult for non-native software companies to succeed in these countries, especially when the economy is down. Worst of all was the Asian region, where license sales threw themselves off a cliff, down 44%, but this region only represents 9% of Intentia's business, and Intentia has yet to built a strong presence in the low labor cost countries. One tiny bright spot for Intentia was North America, where Intentia has struggled for years. License sales perked up 3%. However, North America only represents 7% of Intentia's business, and headcount dropped below one hundred.

However, as SAP and PeopleSoft have predicted, there are signs that the ERP enterprise applications market is picking up. In fthe ourth quarter, Intentia's order book increased slightly compared to 2002, as did the order backlog.

Source: ARC Advisory Group – www.ARCweb.com