Download the 2010 OC’s LARGEST SOFTWARE MAKERS LIST (pdf)
Not even the mighty Blizzard Entertainment Inc. could weather the storm that dragged down sales at Orange County’s biggest software makers last year.
Irvine’s Blizzard, part of Santa Monica’s Activision Blizzard Inc., long was thought to be immune from the consumer spending pullback that dominated last year.
But even the hottest sector of video games—multiplayer online games—felt the effects of the industry’s downturn.
Blizzard, the county’s top software company by sales, clocked in with $1.2 billion in sales for the 12 months through March, off 11% from a year earlier, according to this week’s Business Journal list of software makers.
Including Blizzard, four of the top five software makers here saw sales slump for the 12 months through March, pulling down the total sales of the top 20 software makers list 4% for a total of $6 billion, according to the list.
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.
There were 12 sales estimates on this year’s list. Among the companies that reported sales figures, six were down, two were flat and two were up.
Blizzard
A year ago, the companies on the list saw a collective sales gain, driven largely by Blizzard’s contributions.
Activision Blizzard, itself part of France’s Vivendi SA, said earlier this year it expects its yearly sales to be roughly flat for 2010.
“World of Warcraft,” Blizzard’s blockbuster online game, has long been the company’s biggest franchise and a cash cow for Vivendi.
But growth in subscriptions to play “World of Warcraft” seems to have slowed in the past year.
Blizzard ended 2009 with about 11.5 million “World of Warcraft” subscribers. That’s roughly flat from the end of 2008. Players pay $15 a month for unlimited playing time.
A spokesperson from Blizzard declined to comment for this story.
Lack of a big game release in 2009 may have been another factor that stalled Blizzard’s sales.
In August, Blizzard released “World of Warcraft: Cataclysm,” an expansion pack that added features and content to the existing game.
Last month, Blizzard announced the first installment in a trilogy of games for its sci-fi themed “StarCraft” series is set to hit stores in July.
It’s no surprise that makers of software used by corporations and small businesses suffered during the downturn amid a freeze on technology spending as evidenced in falling sales at No. 2 Sage Software Inc., No. 4. Quest Software Inc. and No. 5 Epicor Software Corp.
Irvine-based Sage, the North American unit of Britain’s Sage Group PLC, has seen two years of declining sales.
The company makes software that does accounting, tracks customers, payroll and other back-office functions.
Its North American sales for the six months through March were $429 million, down 6% from a year earlier. The North America business unit didn’t report profits.
Sage’s British parent saw sales of $1.14 billion, down 3% from the same period a year earlier. It reported earnings before interest, taxes and amortization of $289 million.
Sage has been hit hard during the downturn as many of its small business customers opt to hold on to their cash and defer payments and purchasing decisions.
Chief Executive Sue Swenson, who came on board in 2007, has cut hundreds of jobs across Sage’s disparate business units.
Sage reported that it has 388 workers in Irvine, down 16% from a year earlier. The company is set to move its headquarters to a smaller space within the Irvine Spectrum later this year.
Aliso Viejo’s Quest Software, which makes business software programs that improve on applications by Oracle, Microsoft and others, reported sales of about $700 million, down 4% from a year earlier.
Quest’s first-quarter results missed Wall Street’s expectations. It’s been mum on giving financial guidance for the current quarter and the balance of the year. The company has an estimated 625 workers in South County.
Expecting Improvement
Irvine’s Epicor Software, a maker of enterprise resource planning software for retailers, manufacturers and other big corporations, saw a tough 2009.
Epicor saw sales dive 15% to $410 million. It held its ranking on the list in the No. 5 slot.
It is seeing some signs of improvement. Epicor is rapidly signing on customers for its newest software suite, dubbed Epicor 9, which launched last year.
“Things have been improving day over day,” Chief Executive George Klaus told the Business Journal earlier this year. “We are encouraged by economic data points that may drive more (technology) spending by our prospective customers, as well as initial signs of a return to growth in many of the industries we address.”
Still, its outlook for the current quarter fell short of Wall Street’s initial expectations.
The company is looking for second-quarter profits of about $7 million to $9 million on sales of $104 million, roughly flat from a year earlier.
No. 12 Irvine’s Vision Solutions Inc. should see its sales grow in the coming year with a big pending acquisition.
The company, which makes data management software, said in May it’s set to acquire Massachusetts-based Double-Take Software Inc. in a deal valued at $242 million.
Double-Take, which has yearly sales of about $80 million, makes data backup and recovery software for computers running Microsoft software.
