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TSI International Software Ltd.
(NASDAQ: TSFW)
45 Danbury Road Wilton 06897-0840
President and CEO: Constance F. Galley
Revenues (FYE December 31, 1998): $45,316,000
Net Income (FYE December 31, 1998): $7,157,000
Employees: 298
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Business New Haven
5/3/1999
By: BNH
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Walk into any computer store and expect to be overwhelmed with the array of software packages available to fill a variety of needs.
The same is true for business. Today companies do not rely on a single computer program. Each department in a company may use a different program, system or combination of custom and/or off-the-shelf software packages. Their clients and vendors may use something utterly different.
With the volume of business information and the emergence of e-commerce, it has become critical for computers to communicate. But with innumerable software packages and programs out there, how will they talk to each other? How do they get connected? How does the information get translated?
This is where TSI International Software Ltd. has carved its niche. Its products do more than connect in-house and outside computers.
TSI's enterprise application integration (EAI) product line, named Mercator, offers solutions that allow for interfacing between computer applications without the need for coding special interface programs. TSI's Mercator R/3 makes it possible for SAP R/3 (a resource planning system provided by the German company SAP AG) to communicate with other systems.
Recently, Texas Instruments chose the company's Mercator EAI software for interfacing SAP R/3 with TI's array of business applications.
In addition to its Mercator products, TSI developed a Mercator for EC for e-commerce applications. The product allows internal data to be translated and sent directly to the internal systems of a company's external suppliers or customers.
TSI also offers a Trading Partner line, which provides electronic data interchange, and its KEY/MASTER line, which generates revenues primarily from maintenance. The company has licensed its products to more than 11,000 customers worldwide.
Last October 1998 the company was named among the Connecticut Technology Council's and Deloitte & Touche LLP's “Fast 50,” awarded to the 50 technology companies in Connecticut with the fastest growth in revenues from 1993 to 1997. Revenues for TSI have more than tripled since 1994.
TSI's revenues derive from software licensing (about 64 percent of the total) and service/maintenance fees, with approximately 88 percent of sales from the domestic market.
Total revenues for the fiscal year ended December 31 were $45.3 million, compared to $26.7 million for the 1997 fiscal year - a 70-percent hike. Net income for last year was $7.2 million (60 cents per share diluted) compared to $2.5 million (29 cents per share diluted) for '97.
TSI's balance sheet is strong, featuring a substantial working capital and cash flow base along with a very low debt position. Paid in capital of $63.9 million compensates for the negative accumulated deficit of $400,000. With continued earnings growth, this deficit should disappear in the very near future.
Growth has been key for TSI's and the company plans for continued internal and external growth by penetrating further the SAP customer base both in the U.S. and abroad, as well as by replicating its success with SAP into other markets. In February, TSI partnered with PeopleSoft Inc. enabling expansion of its Mercator line into that market.
Acquisitions have also fueled TSI's growth. Last year the company acquired Software Consulting Partners, which offers services such as installation, support and maintenance for users of SAP software. Earlier this year TSI acquired the UK-based Braid Group Ltd., which will open opportunities to the financial services industry as well as expand TSI's market in Europe and Asia with Braid's 300-plus client base.
A private company since 1985, TSI had an initial public offering of three million shares in 1997. Last June, TSI offered 1.2 million shares in a second public offering with proceeds of $26.5 million earmarked for general corporate purposes and working capital.
To protect itself from unsolicited takeover, the company adopted a stockholder-rights plan last year, and its directors declared a dividend of a purchase right for one preferred share for each share of common stock held.
Earlier this year TSI's board approved a hike in the number of shares of common stock to 70 million, which allowed for the two-for-one stock split on April 1. TSI's stock closed at 21 1/8, down 1 5/8, on April 23.
TSI's business depends primarily on one main product line, Mercator, and the acceptance and implementation of SAP R/3 systems. Although this could be considered a potential negative for the company, it also holds an immense marketing opportunity since only two percent of SAP installations use Mercator. The Braid acquisition also holds promise for expansion of TSI's products worldwide.
Looking at the big picture, success is accomplished through connections - the right connections, of course. But for TSI it is much more than connections - it's enterprise application integration (EAI).
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