Soft Sales May Stall Borland’s Comeback Troubled Software Maker Struggling To Regain Lost Momentum

The renaissance of Borland International Inc. may prove to be short-lived.

Chief Executive Officer Gary Wetsel resigned July 2, at the same time the Scotts Valley-based software maker said it would report sharply lower sales and a larger-than-expected loss for the quarter that ended June 30.

Borland, which has been struggling to convert its core businesses from desktop software applications like spreadsheets and databases to programming “tools” for creating software programs, said it would report a loss of 53 cents to 56 cents per share for the quarter.

That would amount to about $18 million, more than wiping out the $14.3 million profit Borland reported for its last fiscal year that was heralded as a sign of its rebirth.

In a news release, the company said its sales for the three-month period would total only about $35 million, which would mark its slowest quarter in more than six years. Borland will formally report its quarterly results on July 24.

It’s unclear how serious Borland’s troubles are. One company insider, who asked not to be named, said continuing losses would force Borland to eliminate up to one-third of its 900 employees and perhaps sell its signature headquarters building bordering Highway 17.

The insider said directors might consider putting the company - or some product lines - up for sale.

But Borland spokesman Steve Grady denied that conditions were that dire. “There are no layoffs planned at this point,” he said.

Analysts said the company is suffering from competition with Microsoft Corp. on programming tools for individual PCs and has been slow to introduce products for computer networks and the Internet.

Borland’s Delphi programming tool is generally considered superior to Microsoft’s Visual Basic, but Visual Basic is usually cheaper and is easier to use with other Microsoft programs.

“I think they’ve been really fighting a battle which at one fundamental level is unwinnable,” said Donald DePalma, a senior analyst for Massachusetts-based Forrester Research.

But Borland’s bigger problem may be its failure to seize on the mania surrounding the Internet and the Java programming language. Chris Le Tocq, at the San Jose-based market-research firm Dataquest, said Borland has lost the attention of top software developers.

“They haven’t been able to have people feel they were in front of the wave,” he said.

Once the nation’s third-largest software maker, Borland started losing money in the early 1990s when its application programs ran into stiff competition from Microsoft and others.

From 1992 to 1995, the company lost more than $240 million. The company heralded its slim profit for fiscal 1996, which ended March 31, as a sign of its resurgence.