Wall Data Folds Cyberprise Business as Founder Resigns

After 17 years as the head of the company that bears his name, John Wall has resigned as the CEO and director of Wall Data Inc. Wall will reportedly be replaced by Kevin Vitale, president of the company's RUMBA business segment and former COO of Wall Data.

Wall founded the Kirkland, Wash.-based Wall Data in 1982 with the goal of simplifying enterprise mainframe connectivity. This model translated well when the AS/400 was introduced six years later, and Wall Data became one of the leaders in the midrange server, host-access solutions market.

Wall's resignation comes at a time when the company he founded is anticipating an operating loss between $11.5 million and $12.5 million for its first fiscal quarter, ended July 31, 1999. The company has also announced plans to consolidate the Web-to-host and related server-based administrative and security technologies of its Cyberprise product line into its RUMBA product line.

"Wall Data will restructure its worldwide operations around the RUMBA business and record a one-time charge of between $13 million and $14 million during its second fiscal quarter ending October 31, 1999 for workforce reductions, facility closures and certain asset write-offs," says Vitale, who joined Wall Data in 1993.

"The cash flow and positive performance of the RUMBA business have been offset by the significant investments made in technologies and marketing for Cyberprise," Vitale says. "We now believe that the best direction for the company is to leverage those investments in the core RUMBA business and not pursue the corporate information portal market. With these actions, we are now well positioned to focus on the evolution of the PC-to-host market to the emerging Web-to-host and server-based computing platforms."

One industry analyst believes Wall Data, with assistance from New York-based investment banking firm Bear Stearns & Co., may look to sell the RUMBA portion of its business and perhaps spin off Cyberprise as a separate option. "[The August 9] announcements essentially put an end to the Cyberprise name and Wall Data's intentions to bring Cyberprise into the enterprise portal market," says Stephen Drake, senior research analyst with IDC (Framingham, Mass.). "Certainly that's a bit of a blow to Wall Data in terms of what their plans were to roll out this new business."

From IDC's perspective, Wall Data had the opportunity to shop its Cyberprise product to potential buyers, but the result of that search was the realization that Cyberprise is not economically viable in the still maturing enterprise portal market. "There's a lot of confusion in the market," Drake says. "There are several different types of players, and there's not any particular standards. It's a difficult market to get into, and I think the decision was made to not pursue that particular market at this time. Even though Wall Data had some sales of Cyberprise in 1998, the largest majority of Cyberprise sales were still intranet based. This means that the largest majority of Cyberprise customers were using it as your basic Web-to-host type deliverable. They weren't exactly enterprise portal customers."

On a brighter note, Drake points out that Wall Data's RUMBA product line is still "the biggest part of what Wall Data does." RUMBA still has a strong brand image, he says, adding, "When you consider [Wall Data's host access customer base in general], they're probably number three behind IBM and Attachmate. Wall Data represents about 10 percent of the total traditional host-access market."

Because the RUMBA brand will survive Wall Data's personnel changes, financial concerns and product-line decisions, the loyal RUMBA customers will not be directly affected, Drake says. "Certainly, there are some questions about the company, and John Wall leaving is going to be a big issue, but some of this remains to be seen."

Drake adds that the immediate appointment of Vitale is a good sign for Wall Data, as the company was able to quickly find a new president who already knows the RUMBA side of the business. "If Wall Data decides to hold onto its RUMBA product line, the transition from Wall to Vitale should be a smooth one," he says. "That certainly makes a lot of sense."