From Computergram   December 9, 1997

+ ELECTRONIC DATA PROCESSING BLAMES MICROSOFT FOR ITS PROBLEMS

Electronic Data Processing Plc, the UK supplier of turn-key
technology systems to wholesalers and distributors, is finding
its transition into a software and services organization a
difficult one. And the company is laying most of the blame
squarely at the door of Microsoft Corp and its failure to
deliver on Windows NT 5.0. Managing director Richard Jowitt
isn't just cross, he's absolutely hopping mad. The
Sheffield-based company saw its net profits for the year to
September 30 fall 32% to 1.2m pounds on revenue that dropped
12% to 12.6m pounds as the hoped for sales of NT-based software
failed to materialize. EDP has been trying for several years to
reduce its reliance on low margin hardware revenues and to
emphasize its supply chain and distribution management
software, aimed at large wholesalers and distributors in
vertical markets like timber and plumbing supplies. Jowitt has
long been convinced of NT's total inability to run his breed of
software with any reliability, insisting that for now, it
simply isn't capable of replacing Unix. But his clients want
NT, even though Jowitt insists that the equivalent NT-based
hardware will cost twice as much as a Unix installation. "If
anybody tells you any different, then they really don't know
what they're talking about," he said. EDP has had to spend a
fortune in research and development, porting its software to NT
and Jowitt has been keeping the development work open to accept
the promised extra functionality of NT 5.0, the first version
he thinks might be capable of running this scale of
installation. "First Microsoft said it would be ready in June
1997," says Jowitt, "but then it was delayed until March 1998,
and now they say it's the back end of 1998." EDP was gunning
for big increases in published software sales this year to help
supplement the downgrading of hardware sales and related
maintenance. But the delays have cost him dear, and he's
fuming. In fact, EDP has given up the wait and will release its
products for NT 4.0 in the first quarter of 1998. With Micr
osoft's past track record of never ending delays, perhaps
Jowitt should have seen all this coming. But in spite of these
problems, EDP is highly cash generative and it does still have
over 8m pounds in cash. It's been poised to buy out a major
unnamed competitor for what seems like an age now, but
according to Jowitt, the price is still way too high. He wants
struggling competitors to put their customer bases up for sale,
but without inflated premiums for what he regards as their
pre-historic mainframe technology. The total dividend for the
year stays unchanged at 2.2 pence (final dividend 1.533 pence)
and the shares fell 7 pence to 55.5 pence.