Ascential Software Corporation

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Ascential Software Corporation

50 Washington Street
Westboro, Massachusetts 01581
U.S.A.
Telephone: (508) 366-3888
Toll Free: (800)966-9875
Fax: (508) 366-3669
Web site: http://www.ascential.com

Public Company
Incorporated: 2001
Employees: 900
Sales: $113.0 million (2002)
Stock Exchanges: NASDAQ
Ticker Symbol: ASCL
NAIC: 511210 Software Publishers

Although Ascential Software Corporation is a relatively new company that was established in 2001, it has its roots in Informix Corporation, a database software developer founded in 1980. Following Informix's acquisition of Ardent Software Inc. in early 2000, the company reorganized into two independent, wholly owned subsidiaries. One became Ascential Software Corporation, while the other specialized in database software. After the latter was sold to IBM Corporation in 2001 for $1 billion, Informix Corp. changed its name to Ascential Software Corporation and used the proceeds from the sale of its database business to acquire companies and technology that extended its data integration platform for enterprise usage. Following the acquisition of Mercator Software in 2003, Ascential was positioned as a leading provider of enterprise data integration solutions to Global 2000 enterprises.

Informix Specializing in Database Software in the 1980s

Ascential Software Corporation has its origins in a software company called Informix Corporation, which was established in 1980 by Roger Sippl. Informix began as a developer of relational database-management software for minicomputers, Unix workstations, and personal computers. By 1986 the company had about 350 employees and revenue of $18.9 million.

In 1987 Informix merged with Innovative Software Inc. of Lenexa, Kansas. Innovative Software's principal line of business was developing integrated business software mainly for personal computers. Its flagship product was Smart, a family of integrated business programs that included spreadsheet, word processing, and data storage modules. Innovative Software was founded in 1979 by Michael J. Brown and Mark Callegari. It went public in 1983, raising $4.5 million. The company formally launched Smart in August 1984. In 1985 Innovative had revenue of approximately $6 million and was offering substantial discounts on high-volume purchases.

Informix's acquisition of Innovative gave it an entry into the MS-DOS office automation market. Informix had enjoyed rapid sales growth by selling relational database software primarily for the mid-range Unix market. Revenue increased from $10.6 million in 1985 to $18.9 million in fiscal 1987 ending June 30. While the acquisition was initially valued at about $76 million, a sudden crash in stock market prices in October 1987 reduced the value of the deal to around $37 million. The acquisition was completed in January 1988, with Michael Brown becoming president of the new entity, named Informix Software. The new company had about 600 employees.

A Difficult Decade for Informix: 1990s

At the beginning of 1989 Phillip White, formerly of Wyse Technology Inc., was hired as Informix Software's chief executive officer (CEO). According to the San Francisco Business Times, White found a company that had mismanaged its acquisition of Innovative Software, with extensive duplication and an "out-of-control payroll." White immediately laid off about 200 employees and replaced virtually the entire management team. The firm was restructured into two product divisions: the Workstation Products Division, headed by the company's former president, Michael Brown, and headquartered in Lenexa, Kansas; and the Advanced Products Division, which was headed by Phillip White at Informix's headquarters in Menlo Park, California. Informix's database, network, and application-development products fell within the Advanced Products Division, while the Workstation Products Division was responsible for the development and marketing of the company's office productivity software.

Under White's leadership, Informix experienced a turnaround over the next few years. After losing $46.3 million in 1990, Informix turned a profit of $12.6 million in 1991 and $47.8 million in 1992 on revenue of nearly $284 million. As a result, White was named one of 1993's CEOs of the Year by Financial World magazine, along with Bill Gates of Microsoft Corporation, John Sculley of Apple Computer, Andrew Grove of Intel Corporation, and Ray Noorda of Novell Inc.

The second half of the 1990s again found Informix in financial straits. The company announced that it may have overstated revenue for 1995 and 1996 by as much as $250 million. In 1997 Informix had to restate its losses for 1996 to $200 million and $50 million for 1995. Several years later in 2000, the Securities and Exchange Commission (SEC) charged the company with inflating revenue by $295 million and earnings by $244 million between 1994 and the first quarter of 1997. In 2002 White was indicted by a federal grand jury on eight counts of financial accounting fraud.

Robert Finocchio replaced White in 1997 and became Informix's president, CEO, and chairman, following $140 million and $120 million quarterly losses and the layoff of 10 percent of the company's employees. Finocchio was an industry veteran who had spent nine years at 3Com Corp. Although Oracle Chairman Larry Ellison predicted Informix's demise in 1997, the company appeared headed for a turnaround in 1998. Among the steps taken by Finocchio to right the company were selling land for $60 million, cutting costs by $200 million and firing 600 employees, raising $150 million through the sale of stock, and arranging for a $75 million bank line of credit. Finocchio also reformed the firm's accounting methods. He organized the company into three groups: one to sell high-end transaction software for Informix's relational database software; another that specialized in data warehousing; and a third group devoted to electronic commerce. Informix's largest competitors in database software were market leader Oracle and IBM.

In July 1999 Jean-Yves Dexmier was named CEO of Informix, with Finocchio remaining as chairman. In December the company announced that it would acquire Ardent Software Inc. of Westboro, Massachusetts, in a transaction valued at $1.1 billion when it was completed in March 2000. Ardent produced data integration infrastructure software for data warehousing, business intelligence, and e-business applications under the brand names UniVerse, UniData, and DataStage. In May 2000 Informix announced the release of Ardent DataStage 4.0, which enabled firms to analyze their electronic commerce data for decision making. DataStage 4.0 supported clickstream analysis and provided tools for capturing and managing Internet-based data.

In July 2000 Jean-Yves Dexmier was replaced by board member Peter Gyenes as president and CEO of Informix. Gyenes was formerly chairman, president, and CEO of Ardent Software. Over the next six months Informix focused on reorganizing for profitability. After consolidating five business units into two operations, Database Business Operations and Solutions Business Operations, in August, the company established two independent operating companies in September. The first, Informix Software, focused on providing database management systems for data warehousing, transaction processing, and electronic commerce applications. The second, which was to be named at a later date, was launched to focus on providing database and platform-independent software solutions and infrastructure for the e-business marketplace. This new company was to be headed by Pete Fiore, a senior vice-president at Informix, and headquartered in Westboro, Massachusetts. Both companies were wholly owned subsidiaries of Informix, which also announced that it was moving its corporate headquarters to Westboro. Around this time Gyenes added the title of chairman, following the resignation of Robert Finocchio as chairman in September 2000.

Ascential Software Providing Asset Management Solutions: 2001–03

Informix's new e-business solutions company became Ascential Software in January 2001. By then its focus had changed to include not just e-business solutions, but also a broader range of information management software. Its product line was designed to enable customers to easily collect, validate, organize, administer, and deliver information. Its strategy was to assist enterprises in treating information as an asset.

Ascential began operations under its new name with more than 1,500 customers globally and about 1,500 employees. It was a dominant provider of data integration infrastructure and content management software that powered such areas as data warehousing and business intelligence, customer relationship management (CRM) analytics, and media asset management. Its key markets included insurance and financial services, media and entertainment, healthcare, telecommunications, retail, and transportation and hospitality companies. Its products included DataStage XE, which managed the collection, validation, organization, and administration of information assets; Media360, a media asset management solution; Axielle Portal, a corporate portal that organized and delivered data to a firm's employees; and i.Decide, a series of analytic solutions that addressed specific customer-related business concerns.

Company Perspectives:

Ascential Software Corporation is the leading provider of enterprise data integration solutions to organizations worldwide. Customers use the Ascential Enterprise Integration Suite to integrate and leverage data across all transactional, operational, and analytical applications with confidence in the accuracy, completeness and timeliness of critical information. Ascential Software's powerful data profiling, data quality, data transformation, parallel processing, meta data and connectivity solutions enable customers to reduce total cost of ownership and increase return on IT investment. Headquartered in Westboro, Mass., Ascential Software has offices worldwide and supports more than 3,000 customers in such industries as financial services, telecommunications, healthcare, life sciences, manufacturing, consumer goods, retail, and government.

For 2000 Informix reported revenue of $929.3 million, with Ascential Software contributing $121.7 million and Informix Software $807.6 million. Pete Fiore predicted that Ascential's license revenue would increase by 80 to 100 percent in 2001. In March 2001 Ascential announced a partnership with Torrent Systems, Inc., a Cambridge, Massachusetts-based developer of customer applications that enabled e-commerce firms to analyze large volumes of clickstream and transaction data. The partnership resulted in the first enterprise-level, fully scalable data warehousing solution, which was a combination of Ascential's DataStage XE and Torrent's Orchestrate. Later in the year Ascential acquired Torrent Systems for $46 million in cash.

In April 2001 Informix Corp. announced that it had signed a definitive agreement with IBM Corp. to sell its database business for $1 billion in cash. The company expected to receive about $800 million after taxes, which it would use in part to fuel the growth of Ascential Software through acquisitions. Following completion of the sale, Informix Corp. changed its name to Ascential Software Corporation; its ticker symbol was changed to ASCL effective July 3, 2001. Ascential subsequently entered into a strategic partnership with IBM.

During 2001 Ascential released new versions of Media360 and DataStage. Version 2.0 of Media360 extended the solution's existing support for video, audio, image, and text asset management. It also included two new modules, one for desktop publishing and one for web publishing. Version 2.1, an upgrade that offered improved functionality, was released later in the year in September. In November the company released a new generation of DataStage XE products, including DataStage XE 5.0, DataStage XE Portal Edition 1.0, DataStage PACK 1.0, and DataStage XE/390 5.0. The new generation of DataStage solutions enabled corporations for the first time to comprehensively integrate data from all corporate information sources within a single, companywide business integration framework.

Although revenue did not increase as much as expected for 2001, due in part to a depressed corporate spending environment, Ascential ended the year in a strong financial position with $758.6 million in cash on hand. For 2001 it reported overall revenue of $124 million. Revenue from DataStage, the firm's core data integration product, increased 33 percent to $104.4 million from $78.3 million in fiscal 2000. Revenue from Media360 and related content management products continued to decline, and the company announced that it had hired an investment bank to help it divest its content management business.

During the next two years Ascential acquired other software companies and integrated new technology into its product releases. In April 2002 Ascential acquired Vality Technology Inc. for $92 million in cash. Boston-based Vality was a recognized industry leader in enterprise data quality management. It had annual revenue of $21.2 million in 2001 and about 500 customers. The acquisition added about 100 employees to Ascential's workforce. Vality's data quality and cleansing product line, Integrity, complemented Ascential's newly released MetaRecon data profiling solution, which it acquired in April from Metagenix Inc. for $4.5 million. These products offered enterprises an integrated and comprehensive, infinitely scalable, data integration solution.

In the second half of 2002 Ascential released version 6.0 of DataStage, its data integration software. The new release incorporated profiling, quality management, and parallel-processing technology that the company had recently acquired. Pricing for DataStage began at $400,000. Ascential also received recognition as a company to watch in 2003 by Intelligent Enterprise magazine. It also rose from 43rd to 16th on DM Review magazine's 2002 list of the top business intelligence vendors as selected by its readers. For 2002 Ascential reported revenue of $113 million, including $59.6 million in license revenue, and a net loss of $63.6 million.

In June 2003 Ascential released version 7.0 of its Enterprise Integration Suite, the company's flagship enterprise integration solution. The suite combined three data integration products: ProfileStage for data profiling, QualityStage for data quality, and DataStage for data transformation. For the second quarter of 2003 Ascential reported record revenue and profitability since becoming Ascential Software in July 2001. It was the company's first quarterly profit since becoming an independent company and fifth consecutive quarter of revenue growth.

Key Dates:

1980:: Informix Corporation is founded in Menlo Park, California.
1987:: Informix merges with Innovative Software Inc., a Kansas-based publisher of the Smart data program for personal computers and workstations, and becomes Informix Software Inc.
1989:: Informix reorganizes into two divisions, with its Advanced Products Division headquartered in Menlo Park, California, and its Workstation Productions Division headquartered in Lenexa, Kansas.
1998:: Informix forms two new divisions, one for data warehousing products and one for web and e-commerce products.
2000:: Informix acquires Ardent Software Inc. in a deal valued at $1.1 billion and splits into two independent operating companies, one for database software and the other for business solutions software.
2001:: Informix's business solutions software company is renamed Ascential Software Corporation; IBM acquires Informix's database software business for $1 billion; Ascential Software Corporation acquires Torrent Systems.
2002:: Ascential Software Corporation acquires Vality Technology Inc. and the data profiling technology of Metagenix.
2003:: Ascential Software Corporation acquires Mercator Software.

In August 2003 Ascential announced that it would acquire Mercator Software for about $106 million. Based in Wilton, Connecticut, Mercator was a leading provider of data transformation and routing solutions for complex, high-volume transaction processing environments. The acquisition was expected to create the largest independent software vendor focused exclusively on enterprise data integration. Annual revenue was projected to be $250 million, with a base of 3,000 customers. The acquisition was completed in September 2003. Having successfully integrated acquisitions made over the previous two years with cash it received from the sale of Informix's database business to IBM, Ascential was positioned to play a dominant role in the market for enterprise integration solutions.

Principal Competitors

Business Objects S.A. (France); Crystal Decisions, Inc.; Data Junction Corporation; DataMirror Corporation; Evolutionary Technologies International, Inc.; Firstlogic Inc.; Group 1 Software, Inc.; Hummingbird Ltd. (Canada); International Business Machines Corporation; Informatica Corporation; SAS Institute; Tibco Software Inc.; Vitria Technology Inc.; WebMethods Inc.