Is ITWO extinct? [I hope]
This guy McGrath is the best CEO I've ever seen.
A Fresh Start for i2
The supply-chain-software maker has a new CEO, who has quickly cut costs, raised money, and managed to get the company relisted on Nasdaq
In a little more than a quarter, McGrath has managed to get i2's stock relisted on the Nasdaq, raise nearly $40 million to shore up its balance sheet, and dramatically cut costs -- by $20 million in the second quarter alone. "It's amazing how much one person can do in a little over a quarter," says Pat Walravens, an analyst with JMP Securities, who had never heard of McGrath before he took the job in March. "He said, 'Give me 30 days, and I'll have a plan,' and no one believed him."
They do now. When i2 reported its second quarter on July 29, sales were $98 million, down from $110.4 million in the second quarter of 2004, but ahead of what analysts expected. Even better, analysts had been expecting a loss, but McGrath surprised investors with earnings of $31.5 million -- almost triple a year ago. The stock, which had been back on Nasdaq just shy of a month, rose 70% to close at $22.13 after the earnings announcement. And analysts like Walravens and Brad Reback from CIBC World Markets found themselves doing something they likely couldn't imagine months ago: upgrading and recommending the stock.
TWO KEY ASSETS. Indeed, if i2 were a cat, it would have been nearing the end of its ninth life before McGrath came along. Delisted from the Nasdaq, it was on its fifth year of declining revenues, and it was saddled with $300 million in debt. Then the market went south, as spending on supply-chain-management software grew slower than nearly all other business software categories.
businessweek.com |
