Ashton-Tate remains strong despite losing streak.

Ashton-Tate remains strong despite losing streak

A light turnout at Ashton-Tate Corp.'s annual meeting marked the end of a troubled year for the Torrance-based computer software company, whose profitability is said to rest upon whether it can soon ship a new version of its core product.

Although it was a losing year for Ashton-Tate, characterized by delay after delay in releasing dBASE IV, Version 1.1, the annual meeting proceeded without a hitch. All the agenda items were passed, with only one voice objecting to 1 million new shares of common stock that will dilute the 26.5 million outstanding.

"We feel its necessary to retain key personnel," explained Chairman and CEO Edward M. Esber Jr., whose own fate is also said to depend on the success of dBASE IV Version 1.1. "Last year during hard times, we made sure every employee was a shareholder, so all employees work to increase value."

CFO George L. Farinsky allowed that shipping the corrected version will restore the profitability of the company and the confidence of investors. The original version of dBASE IV was introduced to personal computer users in late 1988 but the advanced-yet-cumbersome program was not accepted in the United States. The company took a nosedive in the summer of 1989 and reported two losing quarters of $20 million each, and finished the year with a loss of $28.6 million, or $1.09 a share, on 14 percent lower sales of $265 million.

"We have weathered it and come out with a strong financial position despite our losses," said Farinsky. The cash position of the company is $120 million, he noted, with reduced inventories and account receivables. Uncle Sam kindly gave the company a tax refund more than $118 million, he said.

Although there has been recent speculation that a takeover of the company is imminent, Esber reasserted that management is "committed to running the company independently," and will not disclose any discussions unless required under Securities and Exchange Commission rules.

Despite its strong cash position, the board has considered - but decided against - any share buyback or dividend programs, said Esber.

There will continue to be a strong demand for Ashton-Tate products, predicted Esber.

Personal computers, rather than mainframes, will become more common in corporations, he said, as individuals will want to manipulate more of their own data. The user-friendly dBASE list management products will continue to be popular as they generally allow an individual to customize dBASE software without the need for a professional computer programmer, he said. Ashton-Tate will continue to work on the trend towards graphics rather than the written word and continue to push non-dBASE products, including graphics and word-processing software. Ashton-Tate also now has a toll-free user assistance line while before users had to pay for telephone help.

Sales of dBASE products last year remained stable despite lower overall revenues as the original version of dBASE IV was "widely accepted" by clients in Asia, Europe, South America and Canada, said Esber. The product could have been marketed better domestically, he admitted.

"We have sold more than 250,000 units of this product, or three to five times the nearest competitor," he said. "dBASE IV is a product people have based new standards on."

Numbers seem to back up Esber's assertions: in 1988 dBASE products accounted for 64 percent of the revenues and in 1989, 74 percent. As a percentage of revenues, dBASE product sales appear to have remained almost the same between the two years.

The dBASE IV, Version 1.1 will be released soon, said Esber, who ultimately decides when it is ready. There is no black or white definition of when a software product is ready, he said, but he is waiting for the time that both in-house employees and outside testers agree that the product is ready.

Next time, he said, the company will not be as worried as pleasing all of the people all of the time.

"One of the things we've done is changed the organization's readiness to bring the update of a product and not have a major gap between release," said Esber. "You'll always have things the customer wants to put in, but you need the discipline to say `you'll have it in a new release and soon.'"

In the meantime, the domestic failure of dBASE IV has "caused a chilling effect" on the dBASE market - which includes a community of 1,000 companies that write software using the dBASE language - Ashton-Tate has not lost much marketshare, clients told Esber.

"Clearly, the release date [for dBASE IV, Version 1.1] can't go on forever before we start to see further market erosion," said Esber. "But customers are telling us they're sticking with us, that they approve of us taking more time to come out with a quality product."