Gst, when your told you've got to move to India at less pay...it's not a good sign.
I2 reports $5.53 bln loss, cuts 20 pct staff
(UPDATE: adds CFO comments, analyst comment, details, byline, stock action)
By Siobhan Kennedy
NEW YORK, Oct 16 (Reuters) - Business-to-business software company i2 Technologies Inc. (NasdaqNM:ITWO - news) on Tuesday posted a $5.53 billion third-quarter net loss, after taking a massive write-off on an acquisition, and said it would cut 1,000 jobs, or 20 percent of its workforce.
The company, which cited tough economic conditions and slower customer spending in the aftermath of the Sept. 11 attacks, said its third quarter net loss included a $4.7 billion write-off for its March 2000 acquisition of Aspect Development Inc.
Shares of i2, which closed the regular trading session up 5 cents, or 0.89 percent, at $5.69, were pushed down in after hours trading to $5, according to Instinet.
Dallas, Texas-based i2, which makes software to help companies manage their inventory and purchasing systems, said it posted a net loss of $5.53 billion, or $13.25 a share, compared with a loss of $756 million, or $1.91 a share, in the prior year.
Revenues fell sharply to $194 million from $320 million. Software license revenues, which are widely accepted as a gauge of a software company's growth, fell to $68 million from $106 million last quarter and $202 million a year ago.
``The software license tells a tale,'' Brent Thill, an analyst with Credit Suisse First Boston said. ``It was down 35 percent sequentially ... that just paints a picture that the macroenvironment in software hasn't recovered, particularly in supply chain management.''
I2, which has already cut 20 percent of its staff this year in two separate rounds of layoffs, refrained to give any financial guidance for the traditionally strong fourth quarter or year ahead.
``We're not really commenting on guidance, because who knows what's going to happen?'' Greg Brady, chief executive of i2 told Reuters, citing the economic climate and the unpredictable knock-on effects of the U.S attacks in Afghanistan on spending.
Brady said i2 was aiming for break even on an earnings per share basis in the second half of 2002.
``And if demand were to pick up any, it could be sooner than that,'' he said.
On a pro forma basis, which excludes the charge for its acquisition of Aspect Development and other extraordinary items, i2 said it posted a loss of $55.3 million, or 13 cents a share, compared to a pro forma profit of $30.6 million, or 7 cents a year earlier. Wall Street analysts had expected a loss of 8 cents to 23 cents, with a consensus of a loss of 13 cents, according to Thomson Financial/First Call.
CUTTING COSTS, STAFF
I2's goal is to reduce its third quarter costs, of $280 million before charges, by 10 percent in the fourth quarter and by a total of 20 percent over the next two to three quarters, Bill Beecher, the company's chief financial officer told analysts on a conference call.
``We believe these goals are achievable,'' Beecher said.
The $4.7 billion Aspect write off aside, Beecher said i2 still had $530 million of goodwill from acquisitions remaining, which the company will write off in the fourth quarter, as well as take an additional unspecified charge for the 1,000 job cuts at the same time.
i2 ended the quarter with $765 million in cash and short term securities, Beecher said.
As well as cutting staff, Beecher said i2 would introduce a number of programs, including giving staff the opportunity to exchange part of their base salary for i2 stock options as well as inviting software development staff to relocate to India, obviously for less pay. The company will also implement a 3-day shut down every quarter and certain executives, including CEO Greg Brady, won't be getting any additional compensation for the foreseeable
future.
``What's encouraging is they have got serious about cost cutting and came in below where the guidance had been,'' They did a good job of controlling expenses," Brendan Barnicle, an analyst with Pacific Crest Securities said.
Looking ahead, i2's software sales could pick up with next week's launch of its new software suite, ``i2 Five Two'' -- a scaled down, cheaper version of its software which integrates all i2's disparate applications and makes it easier for manufacturers to share data with non-i2 computer systems, Barnicle said.
``That has been the number one thing that we've been hearing from customers that they've been asking for,'' agreed CSFB's Thill.
Once a high-flyer in the business-to-business software market, i2' stock has lost almost 90 percent of its value since the beginning of this year, underperforming its peers in the Standard & Poor's Computer Software Index by almost 60 percent. The index is down 14 percent over the same timeframe. |
