Iona to stay public despite challenges – Melia

25 Aug 2005

Iona Technologies will remain a public company for the foreseeable future despite the pressures being put on the company to meet quarterly sales targets, its chairman Kevin Melia has insisted.

Speaking at a press briefing along with other senior Iona executives ahead of its AGM in Dublin this morning, Melia said the advantages of being publicly listed still outweighed the drawbacks, even if it meant the company occasionally “took a hammering” from analysts, investors and media commentators when it missed its numbers. The company’s recent resurgence suffered a setback last month when it missed its second-quarter revenue target after failing to close some expected deals in the US within the quarter.

Melia added there was a “raging debate” going on at the moment as to whether or not small companies such as Iona should be listed on stock markets. “Does it make sense for small-cap companies to be publicly listed with all the expense associated with it? Most reasonable observers would say not, but there are advantages. My argument is that we have to live with it. Having to deliver every quarter helps keep us focused but it is a constant challenge.”

Iona CEO Peter Zotto said over the past two years the company had succeeded in restoring its reputation and credibility with the investor and analyst community by making some important strategic changes to its business. These included moving into and becoming a leading player in the emerging services oriented architecture market spearheaded by its well-received middleware integration engine, Artix, whose customers include Deutsche Post, Bell South, MMO2, AT&T and 3.

It had, in addition, overhauled its distribution strategy, building for the first time a global network of channel partners that were well placed to sell Artix into large enterprises. “We didn’t have partners prior to 2003; we weren’t even partner friendly,” Zotto observed.

While less than 10pc of Artix revenues currently go through channel partners, Zotto said the company’s target was that “40 to 50pc of revenues would go through or be leveraged by the channel within the next three years”.

The third element of Iona’s strategic shift, he said, was its push to develop open source middleware – the previously announced Celtix product that is being developed in conjunction with open source consortium ObjectWeb. This would help Iona gain greater visibility within the developer community and encourage the market to migrate to Artix over time, he said.

Larry Alston, vice-president of worldwide marketing and product management, added that unlike some of its competitors Iona viewed open source as a significant opportunity. “We don’t view open source a threat; it can be used strategically to grow our visibility, set industry standards and enable us to compete in a market we weren’t addressing before.”

While innovation and technical leadership were very important to Iona’s business today and in the future, Zotto emphasised the company was also committed to its installed base of Corba users and claimed it was winning repeat business from as much as 94pc of customers as compared with a market average of approximately 70pc.

Zotto said over the past two years Iona had learned that good technology on its own was not sufficient to succeed in the global marketplace. “To be successful, companies have to be excellent marketing and customer-focused organisations as well as great innovators.”

In a statement issued ahead of today’s AGM, Melia said “sustainable performance” was Iona’s key objective. “The clear execution against the stated strategy in 2004 is evidenced by continued sequential growth of Artix revenue, a better aligned cost base and balance sheet strength,” he said. “We are confident that Iona will deliver performance, leadership and growth.”

By Brian Skelly