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Neon on Enterprise Software Spending Spree.

By William Fellows

New Era of Networks Inc says it is looking to establish "beachheads" in PeopleSoft, customer relationship management, e-commerce and vertical markets like telecoms, modeled on this week's acquisition of SAP R/3 consultant SLI International AG. It is talking to potential acquisition targets in each sector and says expects to have a telco specialist on board by the third quarter. Neon said that following the SLI acquisition it would be working closely with SAP in two areas. One to help integrate SAP modules and second to help SAP customer installations. But for SAP, isn't that tacit agreement that its software is hard to integrate with - one of the key reasons why ERP houses have not been quick to turn to EAI enterprise application integration vendors such as Neon for help? "No," say Neon and SLI, "SAP simply cannot do it all."

Neon will also continue to develop and buy to build out its own EAI suite. It's going to create additional Business Event Managers for human resources and supply chain markets and enhance its enterprise process executive and trading floor software in the near term. It says it's not going to get into the business process modeling market like EAI rivals such as Vitria Technology because this sector is completely overcrowded. It will partner for exposure here instead. SLI, which Neon bought for $22m in cash and stock, posted $18m revenue in the last 12 months. It doesn't bring any SAP connectors to Neon's EAI suite but provides implementation and integration, the two prongs of Neon's future strategy.

Typical SAP engagements take between six and 12 months. Neon has 80 prospects in the SAP EAI space. The market didn't appear to like Neon's strong first quarter revenue or profit growth, shaving 10% off the stock and pushing it down to around $46 in early trading Thursday. One analyst appears to have been asleep at the wheel: Neon said the unidentified securities house had forgotten to factor its two for one stock split into its EPS estimate. Others industry-watchers were saying Neon's $0.08 per share missed the whisper number by several cents or that it hadn't continued with the big earnings surprises of recent quarters.
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Publication:Computergram International
Geographic Code:1USA
Date:Apr 23, 1999
Words:368
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