The leadership at Microsoft has told Doug Burgum, head of the unit that markets Solomon, Great Plains, and Navision software, that he should build his business to the $10 billion level in ten years. Based on Microsoft's first quarter results, Burgum has a pretty big goal.

Microsoft has started publishing its financial results by division, and Burgum’s division, Microsoft Business Solutions, reported $106 million in revenue for the first quarter ended September 30.

Burgum notes the quarter doesn’t reflect a full quarter of Navision revenue and there were differences in timing and revenue recognition. Annualizing that $106 million over four quarters doesn’t give the true picture. Before they were acquired, Great Plains was $300 million and Navision was over $200 million and "We have not shrunk," Burgum says.

Some analysts figure MBS at about $600 million annually. If you take the 3,800 MBS employees and multiply by $150,000 sales per employee, not an unreasonable average, you’d end up with $570 million in back-of-the-napkin math. But MBS includes bCentral, which is not broken out. Also, before its acquisition, sales per employee at Great Plains tended to be below industry averages. It’s a tough read.

What the numbers do show is that the $106 million is 43 percent higher than the $74 million in revenue for last year’s first quarter. Microsoft financials say only that "a majority" of the increase came from the acquisition of Navision.

One thing that can be determined is that Great Plains can’t have had a stellar year in fiscal 2002, which pretty much describes everybody in the business. In the quarter ended November 30, 2000, the last publicly reported period for Great Plains, the company had $75.5 million in revenue, 53.8 percent of that from services, the rest from new product licenses. For Microsoft’s quarters ended September 2001, and December, March, and June 2002, MBS recorded revenue of $74 million, $73 million, $75 million, and $86 million for a trailing twelve month total of $308 million, which would seem to be primarily from Great Plains (with Solomon). By comparison, for fiscal 2000, new license revenue was 54.5 percent of the total. Much of that tells us what we already new, that new license sales have been tough and a lot of vendors have prospered by selling to the installed base. For Navision, the year ended June 30, its revenue was $233.3 million the last full year it reported as a public company.

Some competitors don’t think there is $10 billion to be found in the accounting market, and that it has to come from elsewhere, perhaps the small business market and CRM. Somewhere along the way the folks in North Dakota and Denmark have to figure out how to sell perhaps 20 times the amount of goods and services they hawk now to reach $10 billion. It’s going to be an interesting experience.

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