Writing and selling software has been likened to designing and printing money. Look at Microsoft. Or the $100bn Oracle giant. Or Germany's vast SAP corporation. So why is Europe's second biggest business software firm Baan in trouble?
Tomorrow the Dutch group is expected to confirm it lost up to $250m in the fourth quarter of last year, including the costs of a $200m restructuring programme. It warned of the scale of the losses early in January, alongside the news that the chief executive Mary Coleman was quitting. Ten days later chief financial officer James Mooney left, too.
Unsurprisingly the share price has bombed and poor results will see shares dive.
But Baan is no stranger to testing times. It was founded in 1978 by the Baan brothers, Jan and Paul, who pooled their experiences of technology and the construction industry to provide logistical support for manufacturers. In theory the group should have swept through the 1990s on a roll. After all it found itself in a key position in the fast expanding business-to-business e-commerce market.
For a while it looked that way, too. Shareholders rushed in after the company produced a pre-tax profit of €101m on sales of €602m. The stock quickly became a favourite of the Amsterdam exchange - soaring to a peak of €48.65 in spring 1998 - but came tum bling down again on the back of a profits warning in April 1998. Tom Tinsley, a former management consultant, who took over as chairman and chief executive in July 1998 took an axe to the group's costs in a £100m restructuring programme.
In October 1998, its shares also fell 30% after a profit warning. That followed allegations of accounting irregularities when Baan booked as income software supplied to related intermediaries before the end customer had paid the bill.
Mr Tinsley quit - in an unrelated incident - in summer last year to be replaced by Ms Coleman, an old hand from Silicon Valley. She had joined Baan two years earlier when she sold her company, Aurum, to the group and was seen as someone who could rebuild shareholder confidence. She took over at a difficult period. Worries about the millennium bug had made customers cautious about trying new projects.
But some analysts argue that Baan was less able to stand the shock than more powerful rivals like SAP and Oracle and speculation is already swirling. The talk is of a possible takeover bid, though some analysts question whether anyone would want to bother.
Not that Baan is throwing in the towel. Pierre Everaert, the supervisory board chairman and acting chief executive, is trying to rebuild the management team despite having no experience of running a software company. He has recruited Rob Ruijter from Philips Lighting and brought in new executives for worldwide sales and the Americas.
The company's main source of revenue - business applications and automating back office work - is a boom area. Nor is it bereft of cash despite the outflow of funds. At the end of the year Baan reported that it had $170m in the bank and can call on another $215m from the US private investment fund, Fletcher International.
The Baan brothers - who own 20% of the company - are sitting pretty on a pile worth more than £200m. Revenue from its licences is on the rise, the group has getting on for 7,000 clients and has important links with the likes of IBM and Microsoft.
But after two profits warnings and two restructuring programmes in little more than 18 months Baan needs to rebuild confidence. One big step forward would be the appointment of a new chief executive.
Whoever takes the job has the delicate task of steering Baan out of its difficulties, knowing that, if successful, it will alert predators.
