Cary, NC-based SAS trumpeted a possible return to growth, after years of being virtually flat, by posting 8.4% growth over the fist six months of 2021.
The announcement in part read:”To become IPO-ready, SAS will begin to take steps such as refining its financial reporting structure, streamlining certain operational processes, and enhancing its focus on the segments of its platform where the company can continue to succeed and grow to the benefit of its stakeholders. With this announcement, SAS will continue to invest significant sums in – and further develop – its AI capabilities and advanced analytics software and solutions, to continue to meet customer needs and extend its leadership in a growing, highly competitive and increasingly dynamic market.”
As for anything that looks ahead to 2024, don’t hold your breath.
SAS is fairly popular in the Philly area, mainly in life sciences, healthcare and other data intensive industries.
Starting with a disclosure: After graduating from college as a liberal arts major with just one course in Basic under my belt, I found a position writing and editing reports for an academic research organization, which I wasn’t terribly excited about. I soon found after starting that they had troves of data to be analyzed, and I had access to an IBM mainframe and SAS. I quickly became fluent in SAS, and that lead to my interest in software, data analysis, and ultimately business. After two years, I left for graduate school.
I loved working with SAS. At the time, you could do things with it that were practically impossible to do with any other means.
On Monday, the story broke that Broadcom, the huge chip manufacturer that had essentially run out of room to grow in the semiconductor business and begun to acquire software companIes, was very close to an agreement to acquire Cary, NC-based SAS Institute, the company behind SAS. The price was reported to be $15 to $20 billion.
On Tuesday, though, word came that the deal was off. SAS co-founders Jim Goodnight and John Sall, the sole owners, had decided not to sell to Broadcom.
2019, $3.1 billion (context: SAS revenue in 2019 was relatively flat, growing 0.5% in constant currency. In USD, SAS revenue was $3.1 billion, reflecting accounting and pricing changes, and the impact of exchange rate changes.)
2020, $3 billion
In fact, my memory told me that growth hadn’t been great in the previous five years either. For instance, in 2012 “SAS Achieves Record Revenue of $2.87 Billion in 2012, up 5.4 Percent over 2011.”, according to a press release. So there was virtually no growth between 2012 and 2020.
(SAS Institute reportedly saw 7% revenue growth in Q1 2021, though its to soon to assume a longer-term upward trend.)
If that was the performance of a publicly traded company, it would be slammed. But SAS institute is private.
In the age of Big Data, SAS Institute failed to grow; in fact revenue declined in real terms
Why? I don’t know, but would begin by dividing it into two diffeent businesses.:
1/ The Stats Packege
2/General business analytics
In Stats, SAS lost business to open source “R”; Also Python, with its own stats package may have had an impact.
In business analytics, SAS had value in the way you could manage and manipulate data and data sets. Some of that value remains, but there are so many other options now.
SAS Institute has a somewhat insular culture. Goodnigth built a modern day company town in Cary, and working there has been so enticing that the company likely has less turnover and cross-fetilization than its compettitors.
Broadcom is run by Hock Tan, who coincidentally has a residence on the Main Line though the business is located mostly in California and Asia. Tan is a very bright operator, and is known for his. sharp. cost-cutting in businesses he acquires. Which may have been something Goodnight didn’t want to see happen.
Also, SAS did not appear to be a good fit strategically with Broadcom’s business, either with the chip part or the software part (consisting mostly of its acquisitions of CA Technologies and Symantic.) A common observation is that Microsoft, with whom SAS already partners with, would be a better fit.
The Phiadelphia market is a strong one for SAS, given its heavy use in healthcare, life science and pharma.
