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Lotus Development's `1-2-3' software proves hard act to follow

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The problem with success is that everyone starts asking, ``What will you do for an encore?'' And if you don't have an answer, things can get very hot very fast. That's what has happened to Lotus Development Corporation, known as the IBM of software because its key product, the accounting spreadsheet ``1-2-3,'' dominates the industry. After revenues tripled in 1984 to $157 million from $53 million the year before, and earnings more than doubled, Lotus's breathless pace screeched to a halt. Last week it announced that profits last quarter were 30 percent below the same quarter last year.

Lotus's problems come back to the old encore question. ``They're working hard to find new ways to grow, and have had some disappointments,'' says William Zachmann, vice-president of research at International Data Corporation. ``They don't have a really killer second product.''

After 1-2-3 topped the best-seller charts 21/2 years ago, (a position it still holds), everyone began asking what Lotus would come up with next. It soon introduced Symphony, a variation on the 1-2-3 theme with word processing and communications thrown in. That met with fair success, but investors and customers were looking for something radically different, something revolutionary.

So it released Jazz last spring, the equivalent of Symphony, to run on Apple's Macintosh personal computer. When the Mac didn't ``boogie,'' neither did Jazz. The discontent from Wall Street grew louder.

Lotus's newest offering, first shipped earlier this month, is something different. ``Signal'' allows a personal computer user to get stock market information via FM radio signals. But some analysts are concerned that Signal is aimed at too narrow a market (mainly small brokerage firms and financial advisers). It certainly does not have the breadth of a 1-2-3.

On top of these rather tepidly received products, Lotus stumbled into a glitch for the first time. The company, known for its care in getting out ``bugs'' in programs before releasing them, had to recall its new version of Symphony last month because it wipes out data. Lotus was counting on the sales of Symphony 1.1 to prop up earnings. The only other major offering this year is a new version of 1-2-3.

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