Borland has released financial results for its second quarter 2007 and CodeGear keeps making money, even if less than possibly expected. The IDE subsidiary has earned almost another 2 million dollars, with revenues around 13.6 millions, more or less like the first quarter 2007.

During the same period of time, Borland reduced its revenues considerably in the ALM area, and even with cost cutting measures, it kept loosing money: the 6.1 millions loss was only partially compensated by CodeGear earnings. Now what I find a little annoying is that Borland CEO claims "ALM revenue was solid" (forgetting it was much lower than the previous quarter) and blames CodeGear for the poor results: "CodeGear was sequentially flat, but well below our expectations". I can understand the expectations and the corporate style of blaming someone else. But when I read the press release (again quoting the CEO) saying Borland needs "reducing our reliance on CodeGear to achieve ongoing growth and profitability", I was outraged. So I wrote the following blog open letter:

"Dear Tod Nielsen,

your and Borland's attitude towards CodeGear is very confusing, to say the least. Borland used Delphi and the other IDE tools as cash cows for so many years, failing to invest the deserved money in the products in terms of R&D, documentation, and marketing. Depriving the product of its quality, by rushing out unstable versions, keeping it outside of the company strategies, trying to save resources by piggy-backing on Microsoft's .NET strategy, Borland kept damaging the loyal Delphi user base, still very active around the world. If Delphi revenues fell, it was mostly for failed updates of companies still using it. Most of the companies I consult for (several dozens) are still on Delphi 5 or 6, and now are (slowly) evaluating Delphi 2007 as the first viable upgrade after many years.

Spinning off CodeGear, making it independent, letting it use some of its resources for investing in the existing and in new products, looks like a positive strategy. But when I read you being quoted saying that "We are focused on stabilizing this business and reducing our reliance on CodeGear to achieve ongoing growth and profitability" I wonder if we are not back to the cash cow attitude. Reversing several years of low-quality products, with limited new value for existing customers (mostly focuses on Win32 development), and regaining the confidence of developers cannot be a 6-month effort, but requires time and a more than a single good quality release. As Dean Hill wrote in the non-tech newsgroup: "They stick Delphi on the back burner for 5 years and then expect a massive turn around and exceptional returns in less then a year."

Dear Tod, when did you rely on CodeGear for achieving growth? This is totally new to me. You, and other CEOs before you, took the Delphi money and ran away. It was in ALM that all of the "growth and profitability" where supposed to come from, which was the reason for not putting any money into the IDE tools and trying to sell them out. Blaming CodeGear for Borland failures (ALM is not profitable after many years) is very childish.

Let CodeGear keep investing for a couple of years most of what is earning, would you? ALM is doing worse than that... it keep draining your resources. Or even better let it sail freely by selling its asset for a reasonable price. Quote a price, maybe someone can raise the money! Actually I have even a better plan to offer: If the ALM tools cannot make Borland profitable, go ahead and sell them to HP, Oracle, or Microsoft. You'll make a lot of money for your stockholders, who will be quite happy. And as any big company won't care about the Borland brand, CodeGear will be able to get it back.

A loyal Delphi developer."