Compliance to blame for poor software sales?

By Stuart Finlayson

While it may still prove fruitful for software vendors in the longer term, it seems that the push by companies to achieve regulatory compliance in accordance with Sarbanes-Oxley may be the root cause of the recent disappointing results posted by some of the leading players in the software market.

Veritas, PeopleSoft and Sybase were but a few of a host of software vendors to post results that fell below expectations for the quarter just ended. Most blamed poor U.S. sales in June for the lower than expected earnings, with many industry observers citing the pre-occupation of CFO's with bringing their companies into line with Sarbanes-Oxley as a major factor in the reduction of major software contract sign-offs.

Backup and recovery software vendor Veritas was one of the worst affected, with a third of its share value being wiped out the day its poor results were announced. Its compliance-related problems are said to run deeper though, with analysts saying that its email archiving product, designed to help companies achieve compliance, falls somewhat short of other offerings in the market from the likes of KVS, which specialises in email archiving software.

"It is nice to hear that acknowledgement, but we have always felt that we have the best product in our area," said Andy Joyce, Asia Pacific technical director, KVS. "Part of the key to our success is that we are not spreading ourselves too thinly by trying to be all things to all people – we know what we do and we do it well."

As for whether KVS may ultimately go down the road already travelled by Legato and become part of a larger entity, be it Veritas or anyone else, Joyce said that while the Asia-Pac side of KVS was somewhat removed from the corporate decision making process, it would very much determine on the bidder's circumstances and its motives.

"Whatever we do is going to have to be the right thing for KVS and our customers. If an offer was made, we would have to look very carefully at who was making it and why they were making it to ensure that it was not a case of someone wanting to buy us to rescue their own results, but rather that it was the right move for everybody concerned."

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