Irvine’s Blizzard Entertainment Inc. has firmly cemented its title as Orange County’s biggest software maker by sales after barely eking out a lead over Sage Software Inc. a year ago.
The dominant maker of online games played by millions landed at No. 1 by a narrow margin last year,with an estimated $1.1 billion in revenue for the 12 months through March 2008. About $80 million separated the company from Irvine business software maker Sage on the 2008 list, according to Business Journal estimates.
This time around, Blizzard scored a runaway victory.
Blizzard reported annual sales of $1.3 billion through March as part of Activision Blizzard Inc., a unit of French parent Vivendi SA, an 18% increase from a year earlier.
Irvine’s Sage, a unit of British parent Sage PLC, saw $987 million in sales for the same period for its North America unit headquartered here, a 3% drop from a year earlier.
That makes this year’s difference between the two companies more than $300 million.
Sage was one of two companies that reported a drop in revenue. Nine companies reported increases and nine were Business Journal estimates, which rest on the conservative side.
The list includes OC-based software makers as well as locally based subsidiaries and the OC operations of big companies such as Microsoft Corp., Oracle Corp. and IBM Corp.
The companies are ranked by revenue generated from local operations or by total revenue if the company is based here.
In all, the county’s largest 20 software companies saw a 7% revenue gain for the 12 months through March for a total of $6.2 billion. The growth was largely driven by Blizzard, which was the biggest gainer by actual dollar amount.
Taking Blizzard out of the mix, the rest of the companies on the list would have seen a 4% revenue hike during the same period.
Activision Blizzard, headquartered in Santa Monica, was formed in a complex deal by Vivendi valued at around $19
billion.
Blizzard’s blockbuster game “World of Warcraft” continues to be a growth driver for the company, which has more than 1,000 workers here. The multiplayer online game has amassed more than 11 million subscribers, each who pay about $15 per month to play.
In November, Blizzard launched its second installment of the game, called “World of Warcraft: Wrath of the Lich King,” which has since shattered sales records.
The game sold nearly 3 million copies in the first 24 hours and became the fastest-selling PC game of all time.
“The continued success of ‘World of Warcraft’ fueled a strong March quarter for us, despite the weak economy,” Blizzard cofounder and Chief Executive Mike Morhaime said in a call with analysts. “Our financial performance for the quarter was better than expected, both on the top and bottom line.”
During the first quarter, six of the top 20 best-selling PC games were Blizzard’s, according to data from NPD Group Inc., which tracks the video game industry.
The company is said to have a new game in the works.
Sage Restructuring
No. 2 Sage, which has some 400 workers here, is working through a major restructuring.
Chief Executive Sue Swenson, who came on board in 2007, has cut hundreds of jobs across Sage’s disparate business units. She’s also hired a handful of executives to set up Sage’s power center in Irvine.
Many of Sage’s customers, mostly small and midsize businesses, are canceling or opting to defer orders at a time when the company is feeling the sting from the economic downturn and the related falloff in technology spending.
No. 3 Aliso Viejo’s Quest Software Inc., a maker of business software, was the second-best performer by actual dollar amount on the list after Blizzard.
Quest moved up one spot on the list and reported yearly sales of $728 million through March, up 11% from the same period a year earlier.
Quest’s been making a big push into selling what’s known as virtualization software, which helps its corporate customers cut down on network costs as they consolidate operations.
Many of Quest’s customers have been implementing “cost reductions across the board, which for the customer means optimizing existing investments and servers, software, networks and personnel,” said Chief Executive Doug Garn in a recent call with analysts. “Some of our products help them cope with rapid organizational changes from consolidation, divestitures and headcount reductions, which you’ve seen a huge amount of in the financial
community.”
No. 9 Irvine’s Quality Systems Inc., which makes software that doctors and dentists use to manage their practices, has been somewhat recession resistant.
The company has been one to watch for Wall Street as analysts forecast a windfall stemming from President Obama’s stimulus package, which includes up to $20 billion for investments in healthcare information technology.
Quality Systems’ shares are up more than 15% since the start of the year on a recent market value of about $1.5 billion.
The company posted sales of $246 million for the 12 months through March, up 32% from a year earlier.
Irvine’s Epicor Software Corp., which makes business software for manufacturers, retailers and others, held steady in the No. 5 spot on this year’s list.
The company reported $484 million in revenue, up 12% from a year earlier.
The company said it’s seen better than expected sales for Epicor 9, which launched late last year.
It’s landed new customers in emerging markets, especially in the Middle East, where it’s selling to companies in Jordan, Saudi Arabia and the United Arab Emirates.
Epicor saw a big executive shakeup at the start of the year that brought back Chief Executive George Klaus, who ran Epicor for more than a dozen years.
Software veteran Tom Kelly helmed the company for a little more than a year while Klaus took a stab at retirement. Kelly was ousted in January.
Epicor makes what’s known as enterprise resource planning software, which helps midsize companies manage accounting, customer contacts, inventory, sales and other back-office tasks.
No. 11 Foundation 9 Entertainment Inc. saw $100 million in revenue for the 12 months through March, according to Bus-iness Journal estimates. The company combined two of its California studios in Irvine and renamed it Double Helix in 2008.
Acquisitions
No. 18 Austin, Texas-based Borland Software Corp., which has a local office in Santa Ana, last month was acquired by Britain’s Micro Focus International PLC in a cash and stock deal valued at $75 million.
Borland makes what’s known as “application life cycle management” software, which helps other companies develop their own software.
The company is estimated at roughly $45 million in yearly sales. Its unclear what’s set to happen to Borland’s some 40 local workers after the deal closes.
New to the list is No. 17 Orange-based Marshal8e6 Inc., a maker of Web filtering servers and software for small businesses and schools.
Marshal8e6 got a boost in sales after it wrapped up its recent buy of Orem, Utah’s Avinti Inc., a small company that makes software to filter out viruses and other harmful software in e-mails.
Marshal8e6 was formed when Orange’s 8e6 Technologies Inc. and Britain’s Marshal Ltd. combined last year.
Its global headquarters stayed here and its international operations are headed from Marshal’s offices near London.
The combined Marshal8e6 reported $50 million in yearly sales, up from $45 million a year earlier, and is eyeing profitability this year.
