March 24, 1997

Coop's Corner
Del's and Eric's excellent adventures
By Charles Cooper

  One is credited with being a brilliant turnaround specialist. The other is considered one of the top technology experts in the industry, the kind of brainy executive who was born to do the vision thing.

Yes, by all accounts Del Yocam and Eric Schmidt are two very sharp guys. Some might add they are also slightly nuts. That's because in assuming the CEO mantles at Borland and Novell, Yocam and Schmidt are asking for ulcers galore.

Take Borland (please!), a company that has lost money for four straight quarters. Critics have written the company's obituary so often that Wall Streeters laugh when asked to rate Borland's chances of rebounding. But Yocam, who says he has signed on for the long haul, promises things will get better.

The situation is hardly so grim at Novell, but Schmidt, who officially takes over next month, is not walking into Club Med either. Once the industry's undisputed networking powerhouse, Novell has done more damage to itself than Microsoft could ever hope to inflict with its lurches from strategy to strategy.

At the very least, the arrival of Schmidt, who was most recently chief technology officer at Sun Microsystems, means that Novell will really get religious about the Internet. Until now, the company's IntranetWare initiative has been a big joke. Novell simply outfitted NetWare with Web server software and slapped a label on the package -- "Hey, folks, we're hip to the Net."

Even worse, the spring upgrade for the product, which also was supposed to fix lingering performance problems with POP 3 E-mail, may not be ready on time. But Schmidt knows the Internet, he knows networking and he understands how to make the connection work. In conversations, he likes to refer to the faucet as "the world's simplest interface to the world's most sophisticated and most necessary server network distribution system. Just go to a country that doesn't have one, and you'll know the difference."

Schmidt's arrival should mean warmer relations with Sun and--as evidenced by Friday's Novonyx deal--with Netscape. All three companies have an interest in teaming up whenever possible--if only to blunt You Know Who out in Redmond, Wash.

The company is in need of new blood. During the last couple of years, Novell's share of the networking market has slipped to 36 percent from 41 percent, while Windows NT has added 10 points of market share and now accounts for 27 percent of the market. That's bad news in bells, but Schmidt says there's nothing radically broken at Novell.

Perhaps he's right. The company's previous chief executive, Bob Frankenberg, was a capable enough executive. He did the necessary dirty work and sold off most of Ray Noorda's disastrous acquisitions. Unfortunately, Frankenberg was a weak manager who ruled too much by consensus and too little by cracking the whip. That won't be a problem with Schmidt, who can play the role of house Prussian when needed, according to people who know him. We'll see what he has in store next week when he addresses the BrainShare user conference this week.

Now to Yocam.

Borland has been the Sick Man of the software industry for so long that you wonder why Yocam didn't take a pass when the headhunters came knocking.

To be sure, Yocam is a highly regarded manager. When he was Apple's CEO from 1985 to 1988, he played a central role in helping the company increase its operating income to $600 million from $100 million. After an early retirement, he moved to Tektronix where he engineered a successful turnaround.

Now he presides over a company that has been in a funk ever since its ill-conceived acquisition of Ashton-Tate in 1991. Once the third-largest independent software developer in the industry, Borland has been reduced to a niche software supplier--and an unprofitable one at that--staking its future on the development of language and database management tools.

Yocam recently ordered a 30 percent staff reduction to return Borland to the black by its next fiscal year, which starts April 1. That was needed medicine, but whacking away expenses only solves part of the problem.

With sales of Windows 3.1 versions of Borland's products slipping fast, the company has to hope for gonzo sales of Windows 95 and NT versions of its applications. That's not a sure bet. Borland has a full product pipeline--new client/server versions of Delphi and C++ as well as the Latte development tool--but it needs to convince people who own its older products to upgrade. What's more, client/server products take longer to sell, and that could pinch cash flow if things turn nasty.

The company still has a great name and great technology. But those advantages have been outweighed by the lousy sales, marketing and overall bad management that has been the rule, not the exception, at Borland. That's made it relatively easy for Microsoft to lure away top talent by dangling juicy contracts to hot shots.

Now all eyes will be on Yocam and Schmidt to see whether they can succeed where others have failed.

During the last couple of years, several seasoned executives have taken their turn at taming Borland and Novell--only to get chewed up and spit out. It would be a shame if Yocam and Schmidt fail because the two companies they lead don't have much more time to screw around.

Yocam and Schmidt know there's another reason why they have to get it right this time: If they fail, the game might be over for good.

Copyright(c) 1997 Ziff-Davis Publishing Company. All rights reserved. Reproduction in whole or in part in any form or medium without express written permission of Ziff-Davis Publishing Company is prohibited. PC Week and the PC Week logo are trademarks of Ziff-Davis Publishing Company. PC Week Online and the PC Week Online logo are trademarks of Ziff-Davis Publishing Company.

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