Gupta and Borland, both of which were awash in red ink a year ago, have turned to high-end application development tools in an aggressive bid to gain ground on rivals Microsoft and Powersoft.
The strategy seems to be working -- so much so that Gupta has stunned Wall Street by reporting its first profitable quarter in two years. A day earlier, Borland shocked customers of Open Environment by announcing plans to acquire the Boston-based high-end development tool maker for US$64 million.
Gupta -- which in a month will officially change its name to Centura Software turned its US$320,000 profit on sales of US$15.4 million. The unexpected black ink, which pushed Gupta's stock price to US$6.25 from less than US$4 earlier this month, was possible because the Menlo Park, California, company slashed overhead to about US$15 million from roughly US$21 million last year and laid off nearly one third of its employees.
"They've got the expenses down to a dull roar, but they're not out of the woods by any means," says Ed Bierdeman, research director at Dakin Securities in San Francisco. "Now they've got to work on revenues."
For that, Gupta will depend on the long-awaited successor to its PC-based SQLWindows product line. The new tool set, known as Centura, is aimed at distributed client/server development and will ship by the end of this month.
Meanwhile, Borland -- which engineered its own back-from-the-grave turnaround a year ago -- will pay about US$64 million in stock for Open Environment, which makes tools for stitching together new and legacy applications into distributed systems.
The deal instantly gives the Scotts Valley, California, company a strong high-end entry point into large organisations. Borland's Delphi visual development system has been well-received in big information systems shops, but some customers doubted the longtime PC software vendor's ability to handle larger platforms. Open Environment's middleware tools run on platforms that range from mainframes to PCs.
Open Environment's tools work with other visual development systems, including Microsoft's Visual Basic, Sybase subsidiary Powersoft's PowerBuilder and Gupta's Centura. Borland officials say support for other vendors' tools won't change with the merger.