Some of Europe's business application vendors have delivered strong results in an otherwise dour technology market. Executives attributed their double-digit sales growth to a strong domestic following and their mid-market appeal.

Dutch business applications vendor Unit 4 Agresso, for example, claimed top-line growth across all its divisions, posting a 17% rise in sales in the second half of its financial year. But there was a downside. A rapid deterioration in trading and pricing pressures prompted a profits warning in December 2001. Net income in the second half slipped 11% to €6.3 million. For the year to December 2001, profits also tumbled, by 17% to €2.4 million. This was due to significant increases in personnel and operating costs and taxation offsetting the 23% leap in sales to €208.2 million.

It was a similar story at one of its compatriots, Exact, an enterprise resource planning (ERP) vendor that generates 48% of its revenues in the Netherlands. Despite a 23% leap in sales to €104.3 million, net income slipped to €18.7 million from €19.2 million for the second half of 2001 as operating costs rose rapidly. Results for the year to December 2001 were stronger, reflecting a more buoyant first half and the acquisition of US rival Macola in February 2001. Sales and net profits both jumped 25% to €206.3 million and €49.3 million respectively. The 27% hike in revenues from licence sales to €74.5 million was due to the introduction of a new accounting ERP product line and a web-based alternative e-Synergy, as well as the contribution of Macola.

Navision, a much smaller business applications vendor, reported particularly strong top- and bottom-line growth in the first half of its financial year to December 2001. Net profits more than doubled to €10.3 million as sales rose 19% to €71.3 million. In the second quarter alone, sales climbed 23% to €43.2 million. Navision, which generates 23% of its revenues in its home market of Denmark, said that businesses' conversion to the euro contributed to the strong performance of its European divisions. Sales in the US were up just 2% by comparison.

In the US, dismal results from the sector's giants dashed hopes that the IT spending downturn had bottomed out.

Compaq Computer blamed economic uncertainty and competitive pricing pressures for a fall in sales across all its divisions. The steepest fall in sales occurred at its computing division, where revenues fell 19% to $2.4 billion (€2.7bn). Overall, sales fell 16% to $7.7 billion (€8.6bn) in the first quarter to March 2002. However, thanks to a cost-cutting initiative, the PC group pulled itself $44 million (€49.3m) into the black from losses of $131 million (€146.9m) in the same period for 2001.

At Accenture, second quarter net profits plunged a whopping 87% to $10.6 million (€11.9m), as the consultancy took a $212 million (€237.7m) charge on losses from the sale of its venture capital and investment businesses. Sales nudged ahead by less than 1% to $3.4 billion (€3.8bn), as corporate spending on IT services failed to pick up. This proved particularly embarrassing for Accenture, which had earlier said it was seeing some signs of improvement in the market. However, the company pointed to the 12% sales growth in Europe, Middle East and Africa as evidence for its earlier claims.

Fresh results from Oracle signalled continued difficulties for the database and applications giant. A steep fall in new licence revenues across its product range pushed net income down 13% to $508 million (€569.5m) for the third quarter to the end of February 2002. Sales fell 17% to $2.2 billion (€2.5bn).

Oracle's applications business was hardest hit, with licence sales falling 25% to $276.2 million (€309.6m). Overall, applications revenues fell by 15% to $612.3 million (€686.4m). Its applications business has been plagued by problems surrounding the latest version, Oracle 11i, which has been criticised for suffering from too many bugs. Unless this decline is arrested, Oracle will soon face a challenge from rival PeopleSoft for its number-two position in the enterprise applications market.