Baan on the up

Analysts have said this week's surge in Baan's share price has less to do with the software company being on a rival's shopping list than a renewed faith in its long-term prospects.

The company's stock hit an eight-month high on Monday, as companies such as PeopleSoft and even Microsoft were touted as potential bidders for the troubled Dutch ERP (enterprise resource planning) vendor.

Dan Roberts, consultant at Cambashi, said: "Part of their problem has been the way they've developed add-on technology, for example customer relationship management (CRM) and human resources (HR) software."

Roberts said Baan needs to integrate a range of solutions properly, and merging with a rival would only increase the complexity of such a task. "The bigger companies in this market - and that includes Baan - are safe," he said.

Baan CEO, Mary Coleman has denied the company is for sale.

Laurent Lachal, senior consultant at Ovum, said: "I don't think they're of interest to anyone." He said Microsoft - which unlike JD Edwards, Oracle, PeopleSoft and SAP, isn't a major ERP rival - would be better off without Baan.

Lachal said the company got into trouble "because they grew forgetting about customer satisfaction, and that approach has a way of catching up with you in a fairly dramatic way".

Baan reported a loss of $19m in 1998, and has been plagued by a series of executive departures, shareholder lawsuits, and a well-documented accounting scandal.

However, Roberts said prospects are looking better in the medium- to long-term. "Baan should be well-positioned for the mid-market, which will see an upturn next year once companies have resolved Year 2000 issues," he said.