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From: mwest@cruzio.com (Michael West)
Subject: Re: Merger of Easel with VMARK is a big plus for Smalltalk ...
Organization: Wire Wind Ink
Date: Mon, 6 Feb 1995 23:16:37 GMT
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In article <3glt8l$ghe@news1.delphi.com>, jsutherland@BIX.com (Jeff
Sutherland) wrote:

> Some of our competitors are spreading FUD about the merger of Easel and
> VMARK.  I thought it was clear that this is a very positive move with the
> press release I posted over the weekend, but I clearly need to say it again
> based on misinformation that was spread yesterday by those who will go
> unnamed ...
> 
> Easel earnings reported this week for 1994 were $20,251,767.  We had a loss
> for the year of $5,192,251 because we contine to invest heavily in the
> ENFIN product.  ENFIN product revenue growth for the year was more than 60%
> and the Object Studio revenues (ENFIN Smalltalk, Sychronicity, and
> Teambuilder) are now more than 60% of Easel revenues.
> 
> The merger will eliminate about $5M in overhead costs without eliminating
> any staff in marketing, sales, product development, or support.  Thus Easel
> becomes profitable at its current run rate simply through economies of
> scale.
> 
> VMARK earnings this year are $45,200,000 with income before taxes of
> $7,916,000.  This is after spending about $3M buying another company. 
> Analysts report that VMARK is one of the ten fastest growing software
> companies and one of the most profitable.  VMARK management likes Object
> Studio a lot and intends to leverage it forward in a significant way.
> 
> If we combine the revenues of VMARK and Easel for 1994, we see a profitable
> company about to become much more profitable due to economies of scale with
> combined revenues of $65.5M.
> 
> Estimate revenues for 1995 are $80-100M.  This is our way of becoming a
> $100M company which is what we think we need to compete in the
> client/server marketplace (not just the Smalltalk market).
> 
> The net result is that VMARK/Easel will become in 1995:
> 
> * The largest Smalltalk vendor (except for IBM)
> * The fastest growing Smalltalk vendor (including IBM)
> * The most profitable Smalltalk vendor (including IBM's Smalltalk division)
> 
> VMARK is very strong in third party distribution channels, the UNIX
> marketplace, and consulting services.  Their support is 24 hours a day,
> seven days a week, for their business is mission-critical production
> client/server systems.  All of this will strongly leverage Easel's strength
> in the Windows and OS2 corporate application development marketplace.
> 
> Our customers asked for a more financially stable Easel.  We are now,
> arguably, the most financially stable Smalltalk vendor.
> 
> The technical community asked us to fix things they didn't like about ENFIN
> Smalltalk.  We now have more resources to do this.
> 
> Caveat:  The stockholders need to vote to finalize the merger.  I don't
> think they will have any reservations about making this happen.  Even
> without the merger, Easel expects significant growth in revenues and
> profitability in 1995.  The merger gives us a lot more leverage and
> economies of scale.
> 
> Jeff Sutherland
> "C++ runs slightly faster than Smalltalk but a lot later!"
> jsutherland@easel.com (via Galahad BIX blinker)

Jeff,
I think the problem is this: the ESL product line has been an albatross,
and you would have done better to kill or sell off or spin out ENFINy as a
separate VC-backed company.  The acquisiton does give you some revenue
base to work from, but who in the large enterprise market for tools is
familiar with VMARK, and does VMARK really possess the marketing skills to
make a difference for you guys?  Okay UNIX is cool, but is that going to
be big business for you?  I would think VMARK may have to come up to speed
on the realities of 1) large IS markets and 2) Microsoft-dominated
desktops.

Mike West
