53.2 F
Laguna Hills
Thursday, Mar 28, 2024
-Advertisement-

Acquisitions, Spending Spur Sales Gains at Software Makers

Acquisitions and healthy technology spending continued to fuel growth at Orange County software makers during the past year.

Local software companies rang up $3.3 billion in revenue last year, an increase of 12% from a year earlier, according to this week’s Business Journal list.

The list of 20 includes estimates for seven companies. Minus the estimates, software companies recorded 14% growth last year.

Last year’s crop of software makers posted 15% sales growth versus 2003.

OC employment rose 7% to 4,601 workers from a year earlier. That’s an increase from the flat employment the top software makers reported a year earlier.






Companywide employee growth also was up 7% during the past year.

There were no big changes on this year’s list.

Irvine-based No. 1 Sage Software Inc.,part of Britain’s Sage Group PLC,once again held the top spot with $585 million in sales, up 13% from the year-ago period. It reported sales for the year ended Sept. 30.

The gain was slower than a year earlier, when it reported revenue growth of 22%. The company makes business and accounting software.

Sage, which has made about 20 acquisitions during the past seven years, continues to look for companies to buy, said Ron Verni, chief executive at Sage’s Irvine unit, which oversees North American operations.

A recent buy: Sage acquired Mountain View-based Intuit Inc.’s Master Builder product. The software adds to the company’s Sage Timberline Office package, which provides accounting, estimating and operations management software for the construction and real estate industries.

Sage is looking to boost its software for the retail and healthcare sectors, Verni said. The company mainly has focused on the nonprofit, manufacturing, distribution, construction and real estate industries.

Verni said that while customers are making more software buys, it’s taking longer to close a deal. In the 1990s, it took three to six months to close a deal, Verni said. Now it’s typically six to 12 months.

No. 2 Quest Software Inc. of Aliso Viejo grew sales at a 22% clip to $476 million for the year ended Dec. 31.

Quest designs software that helps companies manage and monitor databases and other applications from Microsoft Corp., Oracle Corp. and others.

The company has seen growth via acquisitions and by investing in software development.

Last year, Quest spent $130 million to buy three companies. It opened 2006 with another acquisition,New Zealand-based AfterMail Ltd., which makes software to help businesses archive e-mail.

The software developer expanded its research and development team by 17% last year. The additions pushed the number of Quest research workers past the 1,000-employee mark for the first time.

At No. 3 was Costa Mesa-based FileNet Corp., which registered sales growth of 6% to $422 million during the past year. The company, which makes software for managing various types of company data, held its spot from last year.

FileNet said sales growth in Europe helped boost gains. Unlike several software makers on the list, FileNet hasn’t gone the acquisition route to fuel revenue gains, though it said it’s open to the idea of acquiring companies.

At No. 4 was Irvine video game maker Blizzard Entertainment. The Business Journal estimated Blizzard’s sales rose 17% to $350 million from a year ago.

Blizzard, a unit of France’s Vivendi Universal SA, has a huge hit on its hands with “World of Warcraft,” an online game where players face off in a virtual world via the Internet.

“World of Warcraft” has more than 6 million online users around the world. The game delivered “exceptional results” to the company and its gaming unit, according to a Vivendi release.

Vivendi’s gaming unit swung from a $251 million loss, including a one-time charge of $113 million, in 2004 to a profit of $51 million last year.

No. 5 Irvine-based Epicor Software Corp. recorded a 29% jump in sales to $290 million, versus a year ago.

The business software maker, which targets midsize companies, got a boost from its $120 million buy of Newburgh, N.Y.-based CRS Retail Systems Inc. in December.

Santa Ana-based MSC.Software Corp. grabbed the No. 6 spot based on its sales of $234 million during 2004. MSC is expected to release its 2005 results soon,as early as late last week, according to the company.

The company has been mired in regulatory reviews for the past couple of years. Accounting issues have prevented MSC from filing timely quarterly and annual reports for some time.

Those issues could soon be in the past for the maker of industrial and engineering software. MSC recently filed restated financial statements for 2002 and most of 2003. It also finally issued income statements for all of 2003 and 2004.

The company is looking to get its stock listing off the Pink Sheets and onto Nasdaq.

At No. 14 was Newport Beach-based Artemis International Solutions Corp. The maker of investment planning and control software reported a 10% decline in sales to $47 million during the past year.

The company, which is being bought by Austin, Texas-based Trilogy Inc. for $27 million, lowered its local staff by five workers to 20 in the past year.

A list newcomer was No. 17 Foothill Ranch-based iBaseT.

The company said its sales grew 50% to $36 million during the past year.

IBaseT makes manufacturing software and employs 100 people at its OC operations and 200 companywide.

Another new player on the list: No. 19 Aliso Viejo-based Smith Micro Software Inc.

Smith Micro recorded the biggest percentage sales increase of any company on the list with a 115% gain to $28 million.

The company has seen its sale take off since it entered the market to write software that helps laptops get on the Web via cell phone towers. One of its customers is Verizon Communications Inc.

Want more from the best local business newspaper in the country?

Sign-up for our FREE Daily eNews update to get the latest Orange County news delivered right to your inbox!

-Advertisement-

Featured Articles

-Advertisement-
-Advertisement-
-Advertisement-
-Advertisement-

Related Articles

-Advertisement-
-Advertisement-