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| Growth/Profit Trends |
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Profitability And Growth Trends In The Software Industry
1998 to 2003 |
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| In 2003, the software industry--as represented by public software companies--went through a consolidation
and a mild recovery. There were 17% fewer companies in the list of public companies in 2003 than in 2002. This consolidation
improved the over-all percentages on growth and profitability as the companies that disappeared or were acquired were the weaker
ones. |
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| In the charts that follow, we first take a look at the trends for the entire category of software companies. In the second chart, we took a look at how these trends change when we compare companies that are larger than $100 million with those that are below. The results are startling. |
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| Profitability Trends |
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In 2003 the percentage of profitable companies rose to a level equal to
the best year in the period we have covered; 46% of all public software companies were profitable.
This sounds good but really reflects a shake-out in our industry as the weaker companies either went
out of business or were acquired. |
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Companies with revenue of $100 million and under, as a group, are very unprofitable.
In a good year, 3 out of 10 are profitable while their larger brothers have 7 out of 10 achieving profitability. |
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| Growth Trends |
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In 2003, more companies experienced growth, 55%, which represents an upward
trend from the worst year in our study, 2002. But as pointed out previously, with the industry
shake-out the better companies remained. |
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