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Tuesday October 17, 9:57 pm Eastern Time
i2 Tech beats estimates in Q3, sets stock split
(recasts lead, adds CFO comments in paragraph 4,13, 14 details in graph 7 analysts comments in paragraphs 8-12,
By Ilaina Jonas
NEW YORK, Oct 17 (Reuters) - Software company i2 Technologies Inc. (NasdaqNM:ITWO - news), on Tuesday reported third-quarter earnings that beat Wall Street's expectations, and announced a two-for-one stock split.
Dallas-based i2 earned $28.8 million, or 12 cents a share, excluding acquisition-related items and a $22.4-million non-cash charge for a legal settlement, compared with $10 million, or 6 cents a share, on the same basis in the prior-year period.
Analysts had expected the company to earn 10 cents a share, according to First Call/Thomson Financial.
However, the company lost $755.7 million, or $3.83 a share after including charges, and more than $750 million in goodwill from the acquisitions of Aspect Development and Supplybase Inc. In the year ago quarter the company reported a net profit of $5.7 million, or 3 cents a diluted share.
Third-quarter revenues rose 118 percent to $319.5 million from $146.3 million in the year-ago period. The analysts' consensus was $276.9 million, with estimates ranging from $264 million to $285 million.
``As you can see, it was a very strong quarter for us, with accelerated growth, increased profitability and an expanded solution set that opens up a large market for us, even a larger market opportunity, I should be clear on that,'' said Chief Financial Officer Bill Beecher said in a conference
call.
i2's technology allows companies to transact business and share information with customers and suppliers online.
The company also said its board approved a two-for-one stock split, subject to shareholders approval at special meeting expected to be held Nov. 28. The stock split will be paid as a 100 percent stock dividend on or about Dec. 4.
Revenues from software licenses during the third quarterrose to $201.6 million from about $88.6 million, while revenues from services rose to $77.1 million from $39.3 million and from maintenance to $40.8 million from $18.4 million.
``They had good execution on the top line, though I would have preferred they pulled more to the bottom line,'' said Morgan Stanley analyst Charles Phillips, a top rated software analyst according to Institutional Investor magazine. ``He's OK investing in growth,'' Phillips said of i2 Chairman and Chief Executive Sanjiv Sidhu.
Three deals, one with retailer Kmart Corp. (NYSE:KM - news) another with engineering firm Siemens AG and a third with heavy equipment maker Caterpillar Inc. (NYSE:CAT - news), accounted for about one-third of the its service revenue, with the Siemens deal worth in excess of $100 million spread over several years, company officials said on the conference call.
``This quarter they had several big deals,'' Phillips said, ``probably more than normal. This was a little high.''
Investors will watch the company's margin numbers, which have traditionally run in the low 90 percent range, said Brent Thill, analyst with Credit Suisse First Boston. Gross margin in the third quarter was 90.6 percent, down from 93.3 percent the quarter before, said David Garrity, analyst with Dresdner Kleinwort Benson.
Part of the reason for the lower margin was the cut International Business Machines Corp. (NYSE:IBM - news) receives in its partnership deal, Garrity said, a trade-off from the amount of revenue IBM also generates.
Operating income, excluding amortization of intangibles and non-recurring charges, taxes, interest and other income and expenses outside the core business grew 176 percent to $38.8 million.
Shares of i2 Tuesday closed at $179-1/16, down 5 before the company announced its financial results. The company's 52-week high was $223-1/2, its low $23-1/8. In after-hours activity on the Instinet stock brokerage system, shares of i2 traded at $180-1/2.
biz.yahoo.com
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