Monday May 3, 7:27 pm Eastern Time
JD Edwards sees Q2 loss, not profit, amid Y2K slump
By Eric Auchard
NEW YORK, May 3 (Reuters) - J.D. Edwards & Co. (JDEC - news) on Monday said it expected to post a second-quarter loss of $25 million, instead of the small profit Wall Street anticipated, amid slackening revenues from corporate software spending slump.
In a statement, the Denver company said sales of its products to companies suffered as customers focus on fixing possible Year 2000 glitches in existing programs -- a trend that also sapped results of rival corporate software makers.
Operating losses for its fiscal quarter ended in April could exceed $25 million, said the supplier of software large companies used to link computer operations like manufacturing, payroll, human resources and other key business activities.
The loss compares with the profit of 5 cents per share, or nearly $5 million, Wall Street analysts had expected the company to report in its fiscal second quarter, according to First Call Inc. which tracks brokerage estimates.
By contrast, in the second quarter ended April 1998, the company reported a profit of 11 cents per share.
''We are continuing to operate our business to position us for long-term success,'' Doug Massingill, president and chief executive of J.D. Edwards said in a statement.
For the recently ended quarter, the company expects total revenues in the range of $215 million to $235 million, which marks slight revenue growth of about 3 percent to 12 percent over the second quarter of fiscal 1998.
By contrast, the company reported revenue growth above 20 percent in its first quarter ended in January. Previously, the company had delivered each quarter revenue growth of at least 40 percent or better year-over-year.
''Recent investments in product development and marketing initiatives, along with the investments in sales force hiring completed in the first quarter, are designed to provide long-term benefits to the company,'' Massingill said.
License fee revenue is projected to be in the range of $60 million to $65 million, sequentially down from the roughly $70 million it recorded in its first quarter and the more than $140 million in license fees reported in its fourth quarter.
Other factors contributed to the loss included the impact of workforce additions made in the fiscal fist quarter, investments in product development and sales and marketing, and a $2.1 million research and development write-off, it said.
The company said it had $500 million in cash and investments, and no debt, and said it made strategic investments in the second quarter to prepare it to capitalize on future market opportunities.
Analysts expect the corporate spending slowdown to lift later this year or early in 2000 as companies turn to focus on integrating their back-office computer systems to participate in the growing wave of Internet-based electronic commerce.
A spokeswoman said J.D. Edwards was not prepared to spell out the expected loss per share for the second quarter until it could determine the tax consequences of the loss.
Final results for the quarter will be released on May 26.
J.D. Edwards stock closed down $1.19 at $12.25, near its 52-week low. The stock hit a high of $49.50 in early October before fears of Year 2000-related spending slowdown send the stock tumbling. |
