The industry is dismayed, but apparently unsurprised by Genie Systems being forced into receivership.
Receivers were called into the Mt Wellington software developer by creditors last week (see Genie demise blamed on US market). Genie blamed “difficult and uncertain market conditions” for its plight.
Unisys New Zealand head Russell Stanners, whose company sells Genie products on an application service provider (ASP) basis, calls Genie’s receivership “unfortunate because it is a fine company with a fine product”.
Stanners says he has spoken to Genie executives and is confident the firm will survive. It remains “business as usual” with Genie’s ASP offering.
Genie’s target market is particularly tough at present, says Stanners. “It is not alone. It is a pretty tough part of the market for the global players in e-procurement.”
Software industry entrepreneur John O’Hara is disappointed but not surprised by Genie’s plight. “It’s sad when companies fail, but it’s not unexpected in these difficult times,” he says.
It shows venture capital support, which the company had attracted, including a 16% stake held by investment company Strathmore, does not guarantee success, he says.
Strathmore chief executive Phil Norman says a slowing US economy made it difficult for any New Zealand business to seek funding. A few funding deals were pending but the company was unable to close them.
However, trading continues while the business looks for a buyer.
“It’s business as usual,” says co-founder Peter Garden. “All the staff are here. All the projects are being worked on,” he says.
Insolvency accountant Madeliene Playford, at receiver McCallum Peterson, says Genie partners will receive a letter detailing what is happening to the firm. Customer and sales support will continue as normal, she says.
Fellow co-founder and chief executive Mike Hendry has returned to Auckland to help sort out the company’s problems, having been based in San Francisco.
Hendry, who failed to return calls to Computerworld, told Unlimited magazine last November that Genie should move to profit by late 2001, and increase turnover from $10 million to $20 million in 2000 to $60 million to $100 million within two to three years.
Genie Systems was formed in 1998 to market e-commerce software to mid-market companies worldwide. Products include Order Genie, an internet-based order-entry system which lets firms describe their products online and set up a system for orders; Orderware, a renamed version of the above, re-written in Java; and Data Transformation Manager, which helps convert data from one format to another and securely transfer it between business partners.
Meanwhile, at least one of Genie Systems’ customers was in the dark last week about the future of the company.
Lion Breweries installed Genie’s Data Transfer Manager earlier this year. IT staff there only found out about Genie’s receivership from a local newspaper.
Spokeswoman Rachel Robertson says the DTM system works well and is only a small part of its business.
“We do not know [what will happen]. We will be talking to Genie and other vendors but everything is all go,” she says.
Other Genie customers included Fisher & Paykel, the Blue Star Print Group, US-based Babies ‘R’ Us, Singapore builder Keppel Fels and the Australian subsidiary of Universal Music.
New Zealand firms faced particular difficulty seeking venture funding to help them gain access to offshore markets, Norman says, and they do not have the access to capital as Australian and US firms.
“That’s unfortunate as many companies have significant promise. Their technology is as good as anywhere but the financial support available to them makes it more difficult,” he says.