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Spotlight On Software Companies
This column emphasizes software companies, one of three groups of companies that comprise the BG Index. Hardware and data are the other groups in the index. Data companies were highlighted in the February 1996 issue of Business Geographics (see "Spotlight on Data Companies," pg. 58).
The index covers three firms active in business geographics software; Autodesk, Inc., San Rafael, Calif.; Eagle point Software, Dubuque, Iowa; and MapInfo Corp., Troy, N.Y., as well as a hybrid, Intergraph Corp., Huntsville, Ala. Companies that are involved in geographic analysis technology or mapping but are not covered in the index include two large companies, IBM Corp., White Plains, N.Y., and Microsoft Corp., Redmond, Wash. A third, Ottawa-based Corel Corp., recently acquired WordPerfect from Novel.
Those three firms have products associated with mapping through their software suites. Microsoft also develops the DOS and Windows 95 operating systems that have become a standard for PCs, necessary for using many business and mapping programs. Microsoft’s Windows NY platform is becoming more popular for workstations and networked geographic analysis programs. In addition, IBM develops geographic analysis software and the OS/2 operating system that competes with Microsoft’s Windows.
The table at orientation summarizes the software companies. Note that the firms’ sizes, based on revenue and number of employees, are inversely related to the estimated earnings growth in most cases. The larger a firm, the more difficult it normally is to rapidly increase earnings. An exception is Microsoft, which has one of the highest price to earnings ratios (PE), but also strong expected earnings growth and the largest profit margin of all stocks in the index. Another exception is Corel, which has one of the lowest PEs compared with other index stocks. But a high expected earnings growth. With Corel’s surprise earnings loss last quarter and recent price drop, it may be a turnaround candidate if it can assimilate WordPerfect and get its earnings back on track. Autodesk and MapInfo, also with comeback potential, incurred large price declines toward the end of 1995.
Alliances Announced
Two data companies covered in the index announced alliances in January of this year. American Business Information, Omaha, Neb., will provide its data in Santa Clara, Calif.-based Strategic Mapping Inc.’s MarketQuest product. Equifax, Inc., Atlanta, and IBM announced services to support the growing use of debit and credit cards, focusing on growing international markets. Also, Trimble Navigation Ltd., Sunnyvale, Calif., is developing ProShot Golf, a global positioning system application for the golfing industry (see "GPS Aids Golfers’ Games," Business Geographics, March 1996, pg. 13).
BG Index Stumbles in January
January often is a kind month for stocks. Although the Standard and Poors 500 index gained 3% for the month, the BG index dropped a walloping 11%. Double-digit stock declines were evidenced in all index issues except Intergraph and Primark Corp., Waltham, Mass., which increased 17% and 11%, respectively. The largest decline for the month was MapInfo’s 36%. The stock is trading at all time lows with disappointing earnings for the second quarter in a row.
Schott Consulting Services (SCS) has a Web site that provides all stock columns that have appeared in Business Geographics and GIS WORLD, in addition to index graphs and hot links to stock prices and company home pages. Access SCS at http://www.shcott.com.
Associated Chart being Prepared and Available Soon.
Business Geographics, April, 1996
(This article was reproduced with permission from GIS WORLD Inc., and Business Geographics.)