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December 21, 2000

Ten Fast Facts: Timberline Software

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Timberline Software

WHO:
A publicly held computer software company founded in 1971 by John Gorman and Hap Clarke

WHAT:
Provides accounting and estimating solutions for the construction and property management industries

WHERE:
Beaverton, Ore.


Fast Fact #1: Timberline set records for revenues and net income in 1999.

Comment:  Revenues rose 24 percent to $55.1 million. Net income rose 42 percent to $10.2 million. That's the good news. The bad news is that the company is taking a step back this year. Through three quarters, revenues were $37.5 million and net income was only $2.3 million. "The reason 1999 was such a good year is directly linked to why the year 2000 hasn't been so great," says CEO Curtis Peltz. The culprit -- Y2K. Many companies did most of their technology spending last year, upgrading old software to protect themselves from the millennium bug, Peltz explains.

CEO Curtis Peltz
Peltz


Fast Fact #2: Timberline products are used in 25,000 firms worldwide.

Comment: This year's slump snapped a string of five straight years averaging more than 20 percent revenue growth. Fueling that constant climb was Timberline's decision to jump on the Windows bandwagon six or seven years ago, says Peltz. The early switch from DOS-based solutions to Windows gave Timberline a leg up on its rivals. "We rewrote our software before anybody else did," says Peltz. "We were able to penetrate the market before most of our competitors."


Fast Fact #3: Timberline's work force grew from a little more than 400 to nearly 500 this year.

Comment: Why would employment rise when sales fell? "We're embarking on the most ambitious development project Timberline has ever been involved in," says Peltz, noting the project will set the company's course for the next five to 10 years. The project involves creating an entirely new product line, adding an e-commerce component and rolling all of them into a integrated software suite. Thanks to its sustained profitability, Timberline is funding the cost of development itself.


Fast Fact #4: Timberline currently offers two distinct product lines.

Comment: Precision Collection is a construction estimating tool. Gold Collection is an accounting tool for construction and property management. Coming next is a new project management tool. Together, they will give Timberline the most comprehensive set of solutions in the industry, says Peltz. By packaging all three in an integrated software suite, Timberline will enable various departments within a company to "talk" to one another, says Peltz. The new software suite should hit the market by the end of next year, he says.


Fast Fact #5: Peltz says the average construction document is copied 17 times.

Comment: Timberline's ultimate goal is to shave that number to zero. "If we can eliminate the paper flow in the office, we're talking about huge [savings] because we reduce overhead," says Peltz. A key to making that happen is the e-commerce component of the new software suite. It will empower companies using Timberline systems to conduct online transactions with suppliers, subcontractors and various other businesses -- regardless of whether those other businesses also use Timberline software. All that the other businesses need is an Internet account. After downloading a desktop application e-mailed by a Timberline user, they will be able to open, read and respond to invoices, change orders or any other document the Timberline user sends.       

 


Fast Fact #6: Timberline recently gained recognition for most improved service. 

Comment: The company won the STAR Award from the Software Support Association of America. Since 50 percent of the company's revenues come from service, and service had been slipping due to rapid growth, Peltz is especially proud of the award. At one point, customers calling for service would not receive a response for three days. "Now we are answering the calls in an average of one minute and 85 percent of all problems are solved on the first call," he says.


Fast Fact #7:  Peltz is a former Timberline customer.

Comment: Peltz was working for a construction company when he decided to join Timberline 20 years ago. He created the estimating product line and ran that business unit before succeeding Gorman as CEO when the co-founder retired two years ago. Timberline had started out producing general accounting programs, but soon focused exclusively on the construction industry. The company had a staff of four when it was founded in 1971. When it comes to computer software, "that's about 200 dog years ago," quips Peltz. "It was the very, very beginning of the mini-computer."


Fast Fact #8:  Timberline opened an office in Australia earlier this year.

Comment:  The company first started doing business down under about 12 years ago by forming a network of dealers. However, with business there growing steadily, it made sense to open a regional office in Sydney to serve Australia as well as Southeast Asia, says Peltz.


Fast Fact #9: A bad economy is not necessarily bad news for Timberline.

Comments: During lean times, contractors often bid jobs at or near cost simply to keep their crews working, says Peltz. At times like that, fast and accurate estimates are more important ever, making Timberline's software more valuable than ever, he says. On the other hand, the company's stock (Nasdaq: TMBS) is not immune to the ups and downs of Wall Street. It has fallen from a 52-week high of $15.37 to a trading range below $5.


Fast Fact #10: Timberline recently introduced an estimating application for hand-held devices.

Comment: With Palm Estimating, estimators can collect key project information on hand-held PDAs (personal digital assistants) at the work site, then transfer the data to their Precision Collection desktop software to generate detailed estimates and change orders. Eventually, Timberline hopes to offer a wireless application to provide estimators with a live link to the home office.



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