Spokane Journal of Business

Software maker hits hard times

MEISolutions.com cuts staff radically, pins hopes on new traditional products

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MEISolutions.com Inc., a Spokane maker of software for retail transactions, is fighting for survival after two big contracts failed to produce the major jump in revenues the company had projected.

In its retrenchment mode, the 17-year-old company has developed two new software products for supermarket cash-register systems, a sector in which it first started, MEI Chairman and CEO John E. Molloy says. At one time, when it was still known as Micro Enhancement International Inc., the company had developed relationships with such cash-register industry giants as NCR Corp.

MEI plans to roll out its two new products this fall with hopes that they will help the company reverse its diving sales, Molloy says.

At this point, however, he says, The company could still go either way.

The companys outlook was just the opposite one year ago. It had signed two contracts that were expected to be worth millions of dollars in sales annually, and it had planned to unveil four or five new products as part of its plan to become an Internet-based software company. Last August, Molloy was optimistic enough to suggest that the company might take another run at going public, something it had considered in 1995.

The company ramped up to 70 employees last summer and had agreed to lease a new, 48,000-square-foot office building in the Liberty Lake area.

Seeing the first signs of trouble last fall, however, MEI began a series of layoffs and pulled out of the lease for the Liberty Lake building, Molloy says. Now, after an 85 percent reduction in its work force, the company operates with 10 employees out of a 3,500-square-foot office in the former Cherry Creek Mortgage Inc. building at 1235 N. Post. Molloy says he expects the company to remain at its current staffing level until the end of 2002.

Molloy declines to disclose the companys annual revenues, but in general, he says, the company suffered severely because of a downturn in the e-commerce, or dot-com, market, for which MEI had worked to make its products Internet ready. That industry will rebound, he says, and the company still plans to penetrate that market, but it must rely on sales of more traditional products for now.

Last years potentially big contracts involved the companys conventional products, but those agreements didnt translate into expected sales.

In one of the arrangements, MEI agreed to provide Vital Processing Services, a Tempe, Ariz.-based credit-card transaction processor, with software that integrated with popular point-of-sale systems and Vitals credit-card transaction products. Molloy had said that agreement could translate into tens of millions of dollars in sales, but a competitor offered the product for free, thereby wiping out those anticipated revenues.

In the other agreement, MEI sold the patent rights to its target loyalty system, called Sierra Share Builder, to Tampa, Fla.-based Catalina Marketing Corp. for use in that companys coupon machines in supermarkets. MEIs software tracks the purchases made by shoppers so a retailer can tailor coupons to their consumers buying preferences. Catalina, Molloy says, hasnt rolled out its coupon machine yet, so MEI still hasnt seen any royalties from that arrangement.

MEIs new software products are named e-POSS and e-CORP. The e-POSS product controls a group of cash registers in a retail store. Its similar to Super-POSS, a product of which MEI has sold about 7,500 copies, but the e-POSS product is compatible with Microsofts Windows operating system and works with a broader range of check-out systems than its predecessor. Molloy says the company hopes to sell 4,000 units of that software during the next four years.

The other product, e-CORP, works in conjunction with e-POSS and would be used by a retail-store chain to pool information gathered by e-POSS at its various operations.

Molloy says the company is counting on those products for the near future.

Were trying to move forward in a sustained manner, he says. Wed like to have a brighter forecast. Hopefully, we will in the next two years.

Linn  Parish
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Editor Linn Parish has worked for newspapers and magazines since 1996, with the bulk of that time being at the Journal. A Montana boy who has called Spokane home for some time now, Linn likes Northwest trails, Deep South foods, and lead changes in the ninth inning.

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