Transition v Non-Core


Please explain how Apple was able to discuss future product plans on their recent earnings call – using the vague term ‘transition’ with few additional details –  to describe products which may be nearing end-of-life or due to be refreshed – yet Sage during their Investors Day appeared to openly call out under performing non-core products businesses for competitors, prospects, the channel and employees to see.

Sage doesn’t call business segments or products “under-performing” – instead choosing the label core or non-core . And to be clear – Sage denies that non-core implies that those products will definitely be sold.

Forget for a minute the  post meeting explanation of core vs non core and how it really doesn’t mean what you think (why use such descriptive phrases then?) – and how everyone should  attend a conference to learn the context and details of what core v non-core really mean (what was Investor Day for?)… and Sage doesn’t intend to comment further.

Sage’s explanation?  Non-core business doesn’t mean a product will be sold – only that non-core products “do not share common characteristics such as customers, technology, partners and costs across rest of the Sage portfolio”.

Well that’s comforting.

What does it mean?  Could it mean less R&D? Less attention being paid to an upgrade path? Less efforts to sell more licenses? Fewer new features?  Sage’s announcement seems to hint at that but there’s no way to tell for sure and quite a bit is left to individual interpretations.

According to Sage –  “non core” businesses are best served with a singular focus rather than folding them into a broader “core” structure and encumbering them with commonalities that may not exist.

Never mind that this appears to go against Sage’s apparent long term strategy of “Focused Global Initiatives” with “build once sell everywhere” products such as Sage ERP X3, SageOne, Sage CRM (all specifically called out as examples of products Sage intends to focus more attention upon).

Sage did explain core v non-core on the web cast and stated the phrasing did not mean sale.

In my opinion calling out Non-core businesses was odd phrasing – and out of place.

I assume someone looked at the slide deck before the presentation. Maybe three or four someone’s? Perhaps not anyone in North America though.

Surprise….and guess who’s driving the Sage strategy bus? Hint: Two letters. Starts with U and ends with K.

I think Sage goofed in characterizing a portion of their portfolio in terms that could reasonably imply that named non-core business segments could contain products on their way out or in line for reductions of R&D.

And the slide deck actually calls out “businesses” – aka niche areas – where Sage announces that they are non-core.

Unless UK securities laws mandate it – there is no benefit I can see to Sage having made the core v non core comparison in their presentation except possibly to prepare investors for eventual sale – an eventuality Sage denies is implied in their usage of the non-core term.

To be perfectly clear – it probably makes sense for Sage to follow this strategy.

Sage’s strategy actually seems sound. It doesn’t make sense  for Sage to announce it in the manner which they did.

Yes I read and watched the webcasts and read the followup explanations.

Here’s how Apple just handled a similar “Core v Non-Core” matter on their earning’s call yesterday:

http://www.macrumors.com/2012/07/24/apple-on-fall-transition-apple-tv-impact-of-rumors-and-more/

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Comments

  1. Thanks for your continuing to follow and blog this story. I noticed that Viewpoint Construction Software landed some investors to help them expand, including “in-organic” growth, buying other companies. Now that Timberline is non-core to Sage, it will be interesting if their competitor here in their own state moves to snatch them from Sage. No matter what, I’ll be watching in my own Sage line to see if Sage is making it more attractive to investors.

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  1. […] vs “non-core” categories. While the specifics of what these designations means is unclear to many at this point, my gut and my brain tell me this move makes […]