InformationWeek

September 29, 1997

Informix Upheld

Wal-Mart decision is a vote of confidence for financially troubled company

By John Foley with Bruce Caldwell and Mary Hayes

al-Mart Stores Inc. is giving Informix Software Inc. a much-needed vote of confidence. The retailer, already an Informix customer, is installing an additional 8,200 Informix-based servers in stores nationwide to improve efficiency at the cash register. The deal could help Informix restore some of its tarnished image.

Informix, in Menlo Park, Calif., is in desperate need of good news. The company, which warned last month that its 1996 revenue had been overstated by up to $100 million, now says the problem was worse than expected: Last week, Informix disclosed even more transactions with resellers for database licenses that didn't end up in customers' hands.

The database vendor said that an ongoing audit of its financial records indicates $250 million in revenue over the past two years that was never collected. That disclosure sent Informix's stock tumbling-its value declined 22% on the day of the announcement, Sept. 22, and headed even lower the following two days. Nasdaq also took steps to remove Informix from its listing, citing the company's failure to file a required financial statement for the second quarter. Informix has already racked up losses of $260 million in the first six months of 1997.

Robert Finocchio, who took the helm as CEO in July, says Informix hopes to complete the audit by November. Meanwhile, he told analysts in a conference call last week, "The financial challenges of the company have increased the degree of difficulty for our sales force."

An Informix spokeswoman declined to comment on a report that the Securities and Exchange Commission is investigating the company. Finocchio also declined to comment when asked by analysts if the company's board of directors is aware of any fraudulent or criminal activities by any Informix employees.

Some of Informix's largest customers, however, are standing firm. Wal-Mart is deploying Informix's OnLine Dynamic Server relational database on 6,000 Windows NT systems and 2,200 Unix systems. Says Randy Mott, CIO of Wal-Mart, "I feel better about it than any other retail database technology." Whatever happens to Informix, Mott expects its highly regarded technology to continue to be available. But he admits he's "concerned about how long Informix might be distracted."

IBM is providing Wal-Mart's new servers. The 6,000 NT servers, two per store, replace PC servers that support Telxon handheld computers and provide electronic processing of register receipts. The NT servers will support 100 handhelds pe r store, more than twice as many as today. That should cut the receipt printer's work in half, Mott says.

Leaning Toward Informix
Another Informix customer, Carl Morris, CIO of Whole Foods Markets Inc., a $1 billion natural-foods company in Austin, Texas, says he's "still leaning toward Informix." Morris says he has concerns about Informix's financial stability but still thinks the company's technology is the best in its class. Whole Foods is even considering Informix Universal Server, a multimedia database for its Web applications.

While critics say Informix's claims for Universal Server, introduced last December, were overblown, company officials say more than 200 companies, including Egghead Software, Lego, Lucent, and Warner Bros., are in different stages of deploying the technology.

Analysts are guarded but optimistic. "If Informix plays its cards right, it should be able to hold onto its installed base," says Neil Herman, an analyst with Salomon Brothers. "The company will face a major challenge in new accounts."

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