For most of the last five years, Platinum Technology Inc. Chief Executive Andrew J. “Flip” Filipowski rarely met a potential acquisition that he didn’t like.
Between 1993 and May of this year, Platinum bought 73 companies as the Oakbrook Terrace company struggled to reinvent itself from a provider of software for mainframe computers to a supplier of services to the much more complex environment of networked servers that dominate today’s corporate computing environment.
The price was a scarlet-hued balance sheet and rumblings of discontent from Wall Street, which wondered whether Filipowski could pull off the makeover.
Platinum lost $128.2 million in 1995, $82.5 million in 1996 and in 1997 it laid off 400 workers.
“I think at points along the way people questioned: A. their ability to execute, and B. their ability to pass on value to shareholders,” said Wendell H. Laidley, of Credit Suisse/First Boston in San Francisco.
Now it appears that Filipowski is putting those doubts to rest.
Company shares have nearly tripled in price over the last year. They closed Tuesday down 37 cents at $32.87.
In in its second-quarter report issued Tuesday, Platinum posted a loss from acquisition charges, but revenue grew a healthy 32 percent to $217 million, on course to produce $1 billion in revenue for the year.
Excluding acquisition costs, the company reported an operating profit of $12.4 million, or 14 cents per share, compared with an operating profit of $6.1 million, or 6 cents per share, for the quarter in 1997.
Chief Financial Officer Michael Cullinane said it was important that Platinum show an operating profit because it made three large, potentially disruptive acquisitions in the first half of the year.
“This was a quarter where everybody was watching us very closely,” Cullinane said.
The special charges for buying new companies don’t trouble financial analysts as long as the rest of the balance sheet is sound.
“We’re very encouraged by the progress Platinum is making. What they’ve done is establish themselves as a player to be reckoned with,” said Credit Suisse’s Laidley.
That’s exactly what Filipowski was aiming for at the outset of his shopping binge.
With long, dark hair pulled back in a ponytail, a graying beard, expansive girth, sandals, an earring and open-necked shirt, Filipowski, 47, looks like a cross between a Sumo wrestler and the proprietor of a head shop.
But the unorthodox facade masks an ambitious, straight-ahead capitalist.
He said he expects his company will cross $1 billion in sales this year, up from $739 million in 1997, and he predicted that “if not this year then next year, we will be the fifth-largest software company on the planet.”
Platinum currently employs about 6,000, including 1,500 in the Chicago area.
Platinum’s most recent pickups, all in 1998, are Mastering Inc., a developer of information technology training, for $180 million; Logic Works, a maker of database design software, for about $175 million, and Learmonth & Burchett Management Systems PLC for $75 million.
Filipowski said Platinum has positioned itself as a supplier of an array of corporate computing problems that work well with other companies’ products.
Platinum tries to identify the top 20 problems facing information management professionals and aims to provide software to address all of them.
“The ability to spot a market, find the correct products, integrate them and bring them to a global market is pretty unique,” he said.
One key is to realize that the problems that vie for an information manager’s attention can vary.
One current fixation is the Millennium Bug, which appeared on corporate radar screens last year. The bug causes computers to fail because they confuse the year 2000 with 1900 and could have potentially disastrous consequences for businesses and governments unless millions of lines of computer code are reviewed.
The problem puts pressure on Platinum and its competitors to come up with fixes, but also to look beyond 2000 and identify the next obsession.
“A lot of companies fall in love with their software. Our products come and go,” Filipowski said. “We understand that most of our products have limited lifetimes.”
Platinum products are part of an indispensable, but dense, world of back office software involving arcane tasks like data warehousing, systems management and process modeling.
“We do the plumbing, the electrical work, the stuff behind the walls. It doesn’t always take consumers by storm,” Filipowski said.
“They’d rather go to the opera than hear how JobScheduler works,” he said, referring to a piece of the company’s software.
