Orange County’s top software makers used acquisitions and product launches to rebound with a solid sales gain in the past year.
The 20 largest software companies with operations in OC reported a 15% gain in sales to $3 billion, according to this week’s Business Journal list. The ranking is based on 12-month revenue through March 31 for most companies.
The results show even faster sales growth when Business Journal estimates for six companies are factored out: The 14 software makers that supplied sales totals posted an 18% gain.
This year’s rise in sales follows a 2% sales decline on last year’s list.
Local employment at the top software makers was flat at 4,460. The local software makers grew their company-wide operations, however, with total employment up 7% to 20,599.
Irvine’s Sage Software Inc., which changed its name from Best Software Inc. earlier this year, retained its No. 1 ranking on the Business Journal list for the second year in a row.
Sage reported sales of $517 million for the 12 months through Sept. 30, up 22% versus a year earlier.
“We’ve done 15 acquisitions in the past three or four years and spent $1.4 billion to do that,” said Ron Verdi, chief executive of Sage Software’s North American operation run from Irvine. “We see acquisitions as a cornerstone to our strategy.”
Sage, a unit of Britain’s Sage Group PLC, got its foothold in the U.S. when it bought Best Software for $445 million in 2000. Sage’s parent company, which operates several units in Europe and North America, does all of its domestic expansion through its Irvine operation.
Sage’s Irvine unit accounts for 46% of the parent company’s worldwide sales.
MSC.Software Corp. continued its drop on the list, falling a spot to No. 5 with $256 million in sales, unchanged from a year earlier, amid a financial reporting investigation.
Once the county’s top software seller, MSC.Software plans to restate earnings results for the past three and a half years. MSC.Software’s shares have been delisted from the New York Stock Exchange because of the investigation.
Meanwhile, hedge fund ValueAct Partners LP last year offered to buy MSC.Software for $275 million to take the company private. The software maker declined the offer, but ValueAct could launch another bid for the company when the accounting review is over.
Quest Software Inc. used its acquisition binge to move up a spot to No. 2. The Irvine database management software maker reported a 30% sales gain to $410 million.
In the past month alone, Quest said it closed its buy of privately held Imceda Software Inc. of Burlington, Mass., for $61 million, and announced plans to buy Vintela Inc. of Lindon, Utah, for $56.5 million.
FileNet Corp. slipped a spot to No. 3. The Costa Mesa-based maker of software used to manage far-flung data on corporate networks said it failed to close some big deals in late 2004.
FileNet reported a 6% rise in sales to $398 million in the period.
Irvine video game maker Blizzard Entertainment debuted at No. 4. The Business Journal estimated Blizzard sales rose 10% to $300 million from a year ago.
Blizzard, a unit of France’s Vivendi Universal SA, makes games for computers and consoles that link to TVs, including Sony Corp.’s PlayStation 2 and Microsoft Corp.’s Xbox.
China stands to be a big part of Blizzard’s growth. Last week Blizzard President Mike Morhaime was in Shanghai to launch its “World of Warcraft” game there.
The company also detailed a four-year marketing and distribution deal with Coca-Cola Co. and Chinese online game operator The9 Ltd.
No. 6 Epicor Software Corp. in Irvine moved up a spot with a 52% jump in sales to $250 million. Epicor boosted its company-wide employment by 53% to 1,450 workers.
The business software maker’s growth came from a couple of sources. Epicor said it added 590 customers in 2004 amid new software launches. It also acquired Netherlands-based Scala Business Solutions NV for $88 million last summer.
No. 12 Foundstone Inc. of Mission Viejo posted an estimated $60 million in sales. Foundstone, a maker of security software, was bought by Santa Clara’s McAfee Inc. in August for $86 million.
New to the list is No. 14 Artemis International Solutions Corp. in Newport Beach. Artemis, which supplies investment planning and control software, saw sales fall 7% last year to $51 million. Artemis cut 12% of its workers to 335 companywide.
Also debuting were No. 18 Island Pacific in Irvine and No. 19 California Software Corp. in San Clemente.
Island Pacific, a retail management software maker, reported $28 million in sales last year, up 42% from the previous year. California Software, which sells software tools for processing mortgage loans, saw sales rise 62% to $23 million.
Dropping off the list were former No. 13 Interplay Entertainment Corp. of Irvine, whose French parent Titus Interactive SA has slipped into bankruptcy; No. 18 TCI Solutions Inc., formerly of Irvine but which moved to Dallas; and No. 19 iBASEt of Foothill Ranch and No. 20 MAI Systems Corp. of Lake Forest, both which didn’t post enough revenue to make the list.
