February 14, 2000

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EAI Offers Alternatives To Building Integrated Apps
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"Neon is positioned to be a major winner in the market," Eustis says. "It has such good strategic alliances across the board. That's a strong, smart move."

Tibco Software
Enterprise application integration as a standalone product line is a "dead category," says Fred Meyer, VP of product management for Tibco Software Inc. Rather, he says, companies are focusing on E-business--and EAI is one of several pieces they need to succeed in their efforts.

Tibco offers dozens of infrastructure products to tie businesses together. The company's flagship product, TIB/Active Enterprise suite, connects applications, Web sites, databases, and other content sources. "Tibco has done well with E-business integration," Knickle says. She attributes this success to the company's leadership in the financial industry and to its portal-building relationships with Cisco Systems and Yahoo.

Meyer estimates that about one-third to one-half of the company's total business is tied to traditional EAI tools. The rest, he says, is concentrated on integrating portal and business-to-business efforts. Knickle estimates Tibco's 1999 market share in the EAI services and software segments at 10%.

Tibco, which went public in July, reported total fiscal fourth-quarter revenue of $33.3 million as of Nov. 30, a 96% increase from the year-ago quarter and a 39% increase over the quarter ended Aug. 31. For the fiscal year ended Nov. 30, Tibco reported total revenue of $96.4 million, an 83% increase over fiscal 1998. Based on operating income, which excludes certain charges, the company reported a loss of 12 cents per share for fiscal 1999 and a loss of 17 cents per share for fiscal 1998.

Analysts following the company predict Tibco will increase its earnings at an average annual rate of 50% during the next five years. They expect quarterly earnings per share to remain in the red through August. For the fiscal year ending Nov. 30, 2000, analysts predict a loss of 2 cents per share. But by the end of fiscal 2001, analysts estimate the company's earnings at 21 cents per share.

Mercator Software
Mercator--formerly TSI International Software Ltd.--offers Enterprise Broker, which features heavy emphasis on transformation technology. Eustis says Mercator's transformation technology easily takes users across platforms. "It makes data from one application look like data from another application," she says.

The company recently made its EAI capabilities part of its business-integration solutions, O'Leary says. Enterprise Broker is now an optional component of the new Mercator E-Business Broker suite, which provides a complete platform for business-to-business integration, application-to-application integration, and consumer-to-business applications that run on the Web.

For the fourth quarter ended Dec. 31, Mercator reported total revenue of $31.0 million, up from $26.7 million for the third quarter and $14.9 million in the fourth quarter 1998. For the fiscal year ended Dec. 31, Mercator reported total revenue of $98.6 million, up 118% from fiscal 1998. Based on operating income, Mercator reported earnings of 24 cents per share for 1999 and 18 cents per share for 1998. Knickle estimates Mercator captured 10% of the EAI market share in 1999.

The consensus among analysts who follow Mercator is that earnings will grow at an average annual rate of 42% over the next five years. They predict yearly earnings for 2000 will reach 40 cents per share.

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Photo by Jamie Tanaka

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