N Pick value-added resellers as the MIPS Computer Systems machine, supported by TIS and Mentor, takes off in the Pick market. While he believes that Unix has won the race as the main open operating system, he also thinks it likely that Misys will at some point take o So far, the Misys Open Systems Division has dealt exclusively with Unix software, however, Lomax has never ruled out involvement with Pick houses.
Of course, indirectly, about 60 TIS value added resellers address 20 to 30 markets but they are vertical software houses in their own right.
Lomax rebuts the idea that the division is spread over too many markets saying that it only deals directly with the construction, distribution and accounting, and large office automation sectors. For example, the Team company now sells Mentor’s Maxim product for the construction industry to its users. Lomax admits that it is taking time to integrate all Misys’ activities in Unix within its Open Systems Division, but says that the companies are now beginning to come together. Some people have criticised Misys, saying that the company has been unfocussed in its pursuit of Unix software companies, and that it has bought, willy-nilly, into a variety of vertical markets. However, Lomax swiftly added that supplier loyalty is key in this market and that he is no advocate of supplier hopping as this raises support costs. This is because Misysconsequently would not be tied to the RS/6000. Although Lomax recognises that IBM can play some nasty tricks on its resellers the moment a product become successful – Misys is after all an agent for the AS/400 – he believes that open systems change the rules when it comes to dedicated reselling. For example, the group is actively considering selling IBM’s RS/6000 box as part of its IBM mid-range business. Even so Unix is a significant and robust growth area at the moment despite a difficult trading environment and it has the added advantage of helping to place Misys in a position to capitalise on IBM and DEC open systems initiatives. He points out that while the group’s Unix operations are a major part of its business (accounting for about 60% of its revenue) the IBM mid-range and DEC businesses are also good businesses and will continue to grow both organically and by acquisition. While the tag Unix software house may be an apt description for the majority of Misys’ business activities it is a label about which Lomax has some reservations. That being so the rapid succession of acquisition announcements that Misys made in the first half of 1989 dramatically changed the group’s profile, turning it from a company whose core was in manufacturing its proprietary mini system, Dataller, to a company looking to open systems software for the bulk of its revenue. He stressed that acquisitions will never be the spur to growth for Misys’ earnings per share and pointed out that the group has not bought a company since the summer and is relaxed about the timing of acquisitions. He added that even if the group bought a company 10% of its size, then the discount on the acquisition would not be a major source of growth. He argues that the companies Misys is buying are small in terms of the whole group operation and so, consequently, acquisitions are no longer acting as a kicker to the group’s earnings per share.
Kevin Lomax, chairman of Misys, denies both that the group’s growth is unsustainable and that it is now driven by acquisitions. While this is by no means a bad share price it would seem to indicate some City disenchantment with the group’s evolution which appears to be fuelled by acquisitions rather than by solid organic growth. However, the company’s share price which was up at 319 pence in December 1988 is now hovering around the 260p mark. Misys Plc of Stratford-upon-Avon has been a spectacularly successful company over the past few years but could it now be running out of steam? The company’s rise has been well-charted in the pages of Computergram and elsewhere – it published a pre-tax profit of UKP170,000 in 1985 and, based on its last interim results, looks set to report a pre-tax profit of UKP10m at the end of this financial year.