Jim Janicki

“Anybody that comes out of 2001 in the black is probably a hero,” says Jim Janicki, CEO of MetaSolv. Whether they hang a ribbon around his neck remains to be seen, but many independent software vendors, especially in the OSS software space, are seeing a lot of red.

The customer base on which many interconnection, order management and billing vendors pinned their dreams has been yanked from beneath their feet. Their first customer wins, the data CLECs, which gave them the mind share with which to capture the market, are now just a memory.

Those who succeeded the most — and who got out of the gate fastest — were hit hardest. MetaSolv was an early leader as its Telecom Business Solution, now known simply as the MetaSolv Solution, won early and often. As the writing on the wall about its customer base began to appear, however, MetaSolv began looking elsewhere for customers.

The financial markets are waiting to see it happen before rewarding the company with a more favorable stock price. The stock has gone from a 52-week high of $60 per share last June to a low of $6.75 in late December. Last month it was trading around $9.50 per share, which Janicki says “pretty much reached a floor at this point.”

“We're getting hammered for having too many CLECs, so the way out of that is to have something else to start backfilling. As soon as I start pulling a few global deals or enterprise deals, then I am out of this,” Janicki says.

His company recently launched two initiatives designed to expand its customer base and target markets. MetaSolv formed a European subsidiary that gives the company a local presence in London from which to address the European market. In the meantime, MetaSolv recently picked up new customers in Mexico and Brazil.

“One year ago we were a North American service provider-focused company,” Janicki says. “This year we are focused more globally, which gives us a broader service provider market to sell into.”

But one analyst says success in other markets is not guaranteed. “What MetaSolv is going to find is that there are some European OSS companies that may really give them a run for their money,” says Karl Whitelock, program director of OSS competitive strategies at Stratecast Partners. “They had success here because they got out early and they were the only game in town other than Telcordia.”

The other initiative is a move into the enterprise space, which MetaSolv is addressing in two ways: It will sell its software to large enterprises to manage their facilities and configuration changes. It also will provide software to service providers that can use it to provide managed services to enterprise customers or resell the software directly to the enterprises.

“People are sitting on our stock and saying, ‘Man, if these guys hit that enterprise space at even half a stride per day, their stock goes through the roof,’” Janicki says.

Until then, the company must survive a market that presently doesn't seem to be rewarding its performance. Despite a first quarter earnings report that showed a 49% increase in earnings over last year, from $26 million to $38.8 million, the stock remained stagnant. MetaSolv's net income for the quarter was $5.1 million.

Stock valuation aside, the upside to MetaSolv's early success is obvious. It was well-timed in that it allowed the company to go public when valuations were high. It helped generate the $145 million cushion that Janicki says he has in the bank.

While some companies believe they are better off for not having gone public only to get devalued, MetaSolv sees it otherwise (see Quintessent Communications profile on page 156).

“If you were to go out and [try] to raise $100 million in cash, you would have to give up 60% of your company,” Janicki says. Besides, he is currently cash-flow positive. “We are bringing in more then we are spending, so I would have to take a 20% to 25% haircut before I get to break even,” Janicki says. “So I have a little bit to give before I go to red. If I go to red — if things keep getting worse — I have $145 million in cash. So I can weather the storm better than most.”

So Janicki tries not to think about stock prices. “Rather than worry about things from a stock price perspective, I look more at the day-to-day attitude of MetaSolv and what we are doing to make things happen.”

And although he hasn't seen this kind of downturn as a company leader, Janicki says it's “just like starting over.”

“It is a lot like the first couple of years at MetaSolv,” he says. “You start with a little bit of money — although I have a lot more money now — and every sale is huge.”

So far, MetaSolv's work force reductions have been limited to not replacing normal attrition. The company still plans to grow by 35%.

Janicki thinks it will be at least another two quarters before the telecom market turns around. Had he seen the downturn coming, he says, he might have started his company's global and enterprise expansions a little sooner. “The lesson I have learned is that when things are going real well, start thinking about what you will do when they are not.”