i2 Tech's Shares Tumble as CFO Warns of Slump
By Siobhan Kennedy
NEW YORK (Reuters) -ITWO
Shares of i2 Technologies Inc.(NasdaqNM:ITWO - News) tumbled more than 13 percent on Thursday after the company's chief financial officer said the slump in technology spending had deepened in the current second quarter.
Slowing demand had also forced i2 to reevaluate its business plan, including the possibility of more layoffs, CFO Bill Beecher said. I2 has cut about 10 percent of its workforce in the past year, reducing headcount to roughly 4,800 from 5,300 at the end of the first quarter in 2001.
Details of the plan will be announced during the company's second quarter conference all on July 16, he said, warning there was no "quick fix" for i2's problems.
"The economic environment has gotten tougher," Beecher told Reuters in an interview. "Demand for our products is down."
Shares of i2 were off more than 12 percent, or 36 cents at $2.56 in early afternoon trade on the Nasdaq where the stock was among the top percentage losers.
Beecher echoed the gloomy assessment of corporate spending expressed earlier this week by Ken Goldman, CFO of Siebel Systems Inc. (NasdaqNM:SEBL - News)
The stock of the No. 1 provider of sales and customer service software got slammed after Goldman told investors as the Bear Stearns conference here that the second quarter was just as bad -- if not worse -- than the first quarter.
"The IT (information technology) environment is every bit, if not frankly more challenging this quarter than it was last year," Siebel's CFO Ken Goldman said on Tuesday.
COOKING UP PLAN
Like other software makers i2 -- which makes so-called supply chain software that enables companies to share their inventory and purchasing data with suppliers over the Web -- has been hit hard by the U.S economic slowdown as corporations put the brakes on technology spending.
The company's shares slid throughout 2001 as the Internet bubble burst. As spending declined, i2 posted a string of losses and cut staff.
Further evidence of turmoil at the Dallas-based software maker emerged in March, when i2 named former Chief Executive Sanjiv Sidhu its new CEO, after then CEO Greg Brady stepped down. Now i2, which has already shaken up its sales force, is cooking up another plan.
"We need to reevaluate the business plan and we need to get back to profitability," Beecher said.
In the first quarter, which ended March 31, I2 posted revenue of $168 million, down from $364 million last year.
Software license revenues -- widely used to measure a software company's core growth -- fell to $59 million in the first quarter from $73 million in the previous quarter and $211 million a year earlier.
NO QUICK FIX
"None of this is a quick fix," Beecher warned.
Beecher refused to give any specific details on the strategy, other than to say it would address how i2 goes to market with its complex line of manufacturing, inventory and purchasing products.
He said details of the plan would be announced on the company's second-quarter conference call on July 16.
Asked if the plan could also include job cuts, Beecher said he wouldn't rule it out.
"It's a difficult business environment and we're prepared to make the decisions we need to make to make this company get back to profitability," he said.
At the same time, the company has managed to reduce expenses to about $215 million in the first quarter compared with $355 million in the year ago quarter.
But analysts have said i2 -- which has in part built its business through numerous acquisitions -- needs to cut costs further. |
