Iona on track to stay profitable, says Zotto

31 Jan 2006

Iona Technologies chief executive Peter Zotto (pictured) has told that he has transitioned the company to take advantage of opportunities in the services oriented architecture (SOA), open source and its traditional CORBA marketplaces and that the company is now positioned to become an industry leader.

In an interview Zotto told that the company is executing well in its three respective product markets and that 2006 will see the company adding additional suites of software, particularly in its Artix and open source product segments.

Last week Iona reported revenues of US$19.1m for the fourth quarter, up from revenues of US$17.5m in the prior quarter. A strong full-year total revenue of US$66.8m was marred by a US$1.1m expense, resulting in a net loss of two cents per share. The fourth quarter was nonetheless a profitable quarter for Iona, with a net income of three cents per share for the quarter. The company reported a full-year product growth of 9pc. The new Artix product line represented 20pc of total revenues in Q4, with year-over-year revenue growth of 98pc in the Artix product line.

Asked whether Nasdaq-listed Iona could ever return to the highs of a US$100 shareprice of 2000 compared with US$3.33 yesterday, Zotto said that judging the company by share performance alone is the wrong benchmark to have. “I think first of all you’ve got to define what a good company is. There’s a tendency for observers to look at companies that were high flyers in the 1990s and believe they’ll get back there easily when the industry picks up. That’s the wrong benchmark to have. My goal has been to return Iona to be an industry leader in its segment and a larger, more profitable company,” Zotto said.

“The company is well positioned to become an industry leader and become a larger company. Our product strategies will substantially increase the value of the company, certainly in terms of working with companies like IBM, SAP and Siebel in setting new standards in the SOA market and particularly by becoming a more relevant player in the open source area.

“We were profitable in 2004 and if you take away the charge of US$1.1m first time non-cash expense for accrued vacation we were actually profitable in 2005. The reality is that we have transitioned as a company with a strong market focus, a strong strategy and a good business model,” Zotto said.

Zotto said that the SOA software strategy allows company to upgrade and improve their IT without ‘ripping out their old IT infrastructure’ and instead easily modernise and streamline their IT environment.

“The last big model in the IT industry was client server which was expensive and rigid. Companies want to move away from that towards much more adaptable IT environments and that’s where SOA comes in. We have seen SOA become adopted in the US, UK and Northern Europe sooner than anywhere else in the world. SOA isn’t new, it’s been around for a long time but the early adopters are the companies that would have enabled their IT environments using CORBA such as Credit Suisse.”

Moving onto the company’s open source strategy Zotto said that the company has unveiled a new line of Celtix Service Packs aimed at enabling firms to expand the use of open source in the enterprise, a strategy that builds on the company’s Object Web and Celtix open source enterprise service bus (ESB) strategy.

Zotto said that the company going into 2006 will be making significant additions to its Artix product line that while not limited to Artix can be sold separately. “We’ll be putting a lot more tools in the salesperson’s bag and you’ll see a lot more of that this year.

“The difference between the Iona of the past and the Iona of today is that we’re a much more market-oriented company focused on customer value and growing each of our three product lines. We’ve managed a transition without giving up one of the great core competencies of being an innovative company,” Zotto concluded.

By John Kennedy