Messaging Spells Moolah for Sybase

Businesses’ demand for mobile messaging is paying off for Sybase, an enterprise database player that’s finding wireless messaging is helping to buttress weakness in other areas.

The company reported revenue of $284 million for the third quarter of 2008, an 11 percent increase from $255.3 million in the third quarter of 2007. But messaging was the big story for Sybase, with revenue from that portion of its business spiking 30 percent to $44.7 million from $34.3 million a year ago. The results bested analysts’ expectations. Reuters Estimates predicted Sybase would report revenue of $276.7 million.

Net income increased year over year to $34.7 million for the third quarter of 2008, representing 40 cents a share, compared to $34.1 million, 37 cents a share, in third quarter of 2007.

Sybase (NYSE: SY) CEO John Chen said increasing consumer interest in wireless banking, and demand for messaging technology within customer service and emergency response sectors, were key factors in spurring growth.

“Our value proposition is very strong and we’re seeing a lot of interest in mobile banking and enterprise mobile computing,” Chen said during this morning’s earnings call.

The news comes as technology players and service providers across the board are struggling to deal with a shaky economic climate that has tech leaders tightening IT budgets and stalling purchases.

But Sybase leaders said its mobile messaging business, Sybase 365, hasn’t experienced any negative impact as yet. Sybase 365, which provides mobile middleware for messaging services and e-commerce payment systems, debuted in 2006 with the company’s $400 million acquisition of Mobile 365. Sybase 365 currently reaches more than 2.4 billion global mobile users and processes over 100 billion messages annually, the company said.

“We’re not immune from macroeconomics, but business is still extremely healthy,” Chen said, noting the success of Sybase 365’s “Unwired Enterprise” strategy, a plan aimed at encouraging and capitalizing on enterprises’ adoption of wireless applications and services.

As part of that effort, Sybase recently announced a partnership with Cable & Wireless that expands Sybase’s capabilities in sending and routing mobile multimedia messages.

In addition, the company is also working to strengthen another area of its messaging business. Sybase’s iAnywhere mobile messaging technology, which provides wireless e-mail access, management and security features for a range of devices, has jumped on the iPhone bandwagon.

iAnywhere, which supports Exchange and Lotus Notes, now supports Apple’s first iPhone and its new 3G iPhone. Sybase also said it plans later this year to enhance its iAnywhere Mobile Office with additional components, including push e-mail, contacts, corporate directory and calendar access.

In other areas of its business, Sybase reported its licensing revenue grew 9 percent in the third quarter, to $92.9 million, compared to the same period last year. Services revenue also increased, rising 8 percent to $146.3 million from $135.8 million a year ago.

Revenue growth across such diverse business segments may be one reason why Sybase isn’t facing dour economics in the near future, according to one industry watcher.

“Sybase has a substantial revenue stream — half as much as their software license revenue is coming from their messaging business and the growth is changing the mix,” Mervyn Adrian, an analyst at Forrester Research, told “It will continue and we believe it will be less impacted by economic conditions than enterprise software purchases may be.”

Adrian’s outlook aligns with financial expectations provided during the earnings call. Sybase predicts a strong fourth quarter and a solid start for 2009, and the company raised guidance for full-year 2008 total revenue to arrive between $1.122 billion and $1.132 billion.

Shares of Sybase closed down 0.75 percent, at $26.40.

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