Burbank IBM unit takes a big step toward freedom.

Software developer now works with old competitors

Altium, a software engineering company, is doing something that was unheard of until recently -- designing programs that are compatible with personal computers manufactured by companies other than its owner, IBM.

The Burbank-based company has basically struck out on its own as Big Blue struggles through one of its most difficult periods ever. And according to Altium officials, it's working.

Without guidance from International Business Machines Corp. headquarters in Armonk, N. Y., Altium has changed its name, is planning to move, is changing its sales distribution system and is working with other personal computer companies.

In the past, IBM has not let its units stray far from the fold. There were button-down rules to follow or you didn't work for International Business Machines.

However, things are changing at IBM, which for the first time in its history is eliminating thousands of jobs, has had record losses and is being squeezed by other high-technology companies.

Until two weeks ago, Altium was known as Cadam Inc. but decided to rename itself because of changes at the company, said Stephen Fazio, senior vice president of operations.

A more significant and almost revolutionary change at the company, though, is that Altium has begun working with personal computer manufacturers other than IBM.

It is the first time, according to Altium officials, that an IBM software company is designing programs that are compatible with desktop units made by competing manufacturers.

"This is a very significant change for IBM. It has received quite a bit of coverage in the (computer trade) press because it is such a departure for IBM. It's part of this whole decentralization that's happening at the corporation," said Antonia Lantz Inman, a company spokeswoman.

IBM, which for years meant straightlaced, toe-the-line conservative business practices, has been loosening its grip on its subsidiary operations. Officials at Altium say its practices are the model for IBM's movement toward decentralized operations.

In addition to designing software programs that will be compatible with desktop units made by Sun Microsystems Inc. and Hewlett-Packard Co., Altium is considering partnerships with other companies on joint projects. Altium is also considering acquisition of rights to sell software developed by other companies that previously competed against IBM units.

The company is also looking to expand its network of sales organizations and representatives, and is considering going into computer retail stores as an outlet for its consumer software programs.

Altium, which has annual revenues of about $150 million, is also moving into new markets abroad, namely India and Russia. However, the possible move into Russia is contingent on the outcome of current political turmoil going on in that country, said Fazio.

"In the old IBM, these events may never have occurred," said Altium President Lee Murray in a statement. "Look for Altium to continue reexamining how we serve and support customers worldwide with no holds barred."

Murray was traveling recently and was unavailable for an interview but industry analysts said what is happening at Altium is indicative of the changes at Big Blue.

"IBM is becoming more decentralized and its units are becoming more independent," said Sheldon Grodsky of Grodsky Associates, a securities and financial planning firm in South Orange, N.J.

"It may very well be that some of these units will become so independent that in a few years they will no longer be with IBM. IBM may want to spin them off or sell them or the company itself may try to go public."

Fazio said he knows of no plans by IBM to sell Altium or for Altium to in any way break away from Big Blue.

"There has been a lot of speculation about what IBM is going to do, about whether it will sell off some of its units," he said. "Who knows what's going to happen in a few years. I don't know but I can tell you that right now we're trying to make this the best company it can be."

Murray and Fazio -- the two top executives at Altium -- are both from IBM, which purchased the company from Lockheed Corp. in 1990 for about $75 million.

"We came in here with the idea of changing things," Fazio said. "We have been able to do that independently of IBM and we like to think that we have become a model for other (IBM) companies."

Fazio said that while the computer software engineering business has been flat the last couple of years, Altium's revenues and profits have increased.

He would not release specific figures but said this year both profits and revenues will increase more than 10 percent.

Fazio noted that sometime in the next year Altium will move into new facilities in Burbank from its current office on North Buena Vista Street.

Over the next year, Fazio said, the company does not expect to significantly increase the number of employees from its current level of about 450.

But he said the company does expect to develop new generations of software.

Altium currently has three software products:

* Micro Cadam, a software program used for mechanical design and drafting purposes.

* IBM CAD, a self-help software program for novice computer users.

* P-CAD, a software program used in designing electronic circuit boards.