Just When Sequent Thought It Was Safe...Robert D. Hof
By all rights, Karl C. "Casey" Powell Jr. should finally feel free to relax and perhaps cruise the Oregon hills in his Ferrari or Lamborghini. Or, he could take a few days off to ferry his two teenage daughters to horse shows in his Ardern coach. After all, the chairman of Sequent Computer Systems Inc. could use some R&R after bringing the company back from the brink.
In 1991, with a sour economy and sales to Unisys Corp., its biggest customer, drying up, Sequent lost $49 million on revenues of $213 million and seemed headed for oblivion. But by streamlining and refocusing itself, Sequent has bounced back. It has been profitable since last December, and third-quarter sales rocketed 52% from the year before, to a record $82 million.
LAVISH MARKETING. So why isn't Casey Powell taking it easy? Perhaps because for Sequent, which he co-founded in 1983, the Big Test has only just begun. For years, the Beaverton (Ore.) company has shared its hardware niche with a few similarly sized companies, such as Pyramid Technology Corp. The big computer guns--Digital Equipment, IBM, Hewlett-Packard--just weren't interested in making machines like Sequent's. No wonder: Sequent's multiprocessor design, based on as many as 30 PC-class microprocessors, could do all the work of the big companies' traditional minicomputers and mainframes for a third of the price or less.
But now, those same companies are racing after Sequent. Hewlett-Packard and American Telephone & Telegraph Co.'s NCR unit have both launched multiprocessor lines over the past two years, backing them with lavish marketing efforts. IBM is working on several multiprocessor designs, too, with shipments expected to begin next year. And Sun Microsystems Inc. is about to expand its line. "We've been running into Sequent more often," says Sun Vice-President Anil P. Gadre, who expects more encounters in 1993.
In short, the cheap power of multiprocessors is just too compelling to ignore, especially for jobs such as logging hotel reservations. Consider two of Sequent's best customers: Dollar Rent A Car and the London Stock Exchange.
Powell has no time to feel flattered by imitators. He has his hands full trying to keep Sequent one step ahead, mainly by getting important software packages rewritten to run fast on Sequent machines before other suppliers can snag them for their multiprocessors. Sequent got a big sales boost in the late 1980s by helping Oracle Corp. tune its data-base program to run extra fast on Sequents. But now, other computers can run Oracle's software quickly, too. Says Powell: "When other people offer the same capabilities, we have to go on to something new."
For now, that something is helping mainframes dish out data to hundreds of PCs on a network. Customers such as Du Pont Co. can now copy mainframe data to their Sequents, where the first multiprocessing version of NovellInc.'s NetWare software for PC networks does the rest. So far this year, Sequent has sold 100 systems running NetWare, generating about $20 million in revenues. "It's a huge opportunity," says International Data Corp. analyst John Morrell, as customers seek to enhance PC-to-mainframe links. In early 1993, software from Red Brick Systems will let many PCs pose complex questions to a large Sequent data base simultaneously.
Moving downscale in hardware may provide still more growth. Sequent is planning a line of so-called superservers, which employ just a few processors and anchor small PC networks. That market already includes some biggies such as IBM and Compaq Computer Corp., but Powell may again have an edge in software: Microsoft Corp. has picked Sequent multiprocessing technology for Windows NT, the advanced operating system software it is readying for 1993.
FARMING IT OUT. Still more downsizing--the managerial kind--has trimmed Sequent's costs. In the past year, Powell and Chief Operating Officer Waldo J. Richards, a Sequent veteran, have farmed out more manufacturing, such as cabinet assembly, to help cut manufacturing and operations costs by 20%. At 4.5 times a year, inventory turns are running at twice the rate of early 1991. More important, the 143-person sales force now focuses on potentially large accounts, not every small customer that shows up. And because of a 23% staff cut in 1991, the company's revenue per employee has jumped to $219,000, which is 68% higher than a year ago.
For now, Sequent is holding its own. The company even won a contract to supply AT&T, which is a major Pyramid reseller, with computers to help local phone companies track emergency calls. With more triumphs like that, Powell might finally get some time to relax.
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