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Technology Stocks : J.D. Edwards debut! (JDEC) -- Ignore unavailable to you. Want to Upgrade?

To: Michael Burry who wrote (389)	5/3/1999 8:44:00 PM
From: Caxton Rhodes	Respond to of 583

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.

To: Michael Burry who wrote (389)	5/4/1999 3:25:00 AM
From: Caxton Rhodes	Read Replies (1) \| Respond to of 583

.D. Edwards Is Latest ERP Developer To Issue Y2K-Related Warning Dow Jones Online News, Monday, May 03, 1999 at 21:06 NEW YORK -(Dow Jones)- J.D. Edwards & Co., which develops enterprise resource planning, or ERP, software for companies, Monday warned it will report a surprise loss for its fiscal second quarter, citing slowdown in demand as companies focus resources on fixing the year 2000 computer problem. J.D. Edwards (JDEC) said it expects to post a loss, excluding accounting items, of more than $25 million on revenue of $215 million to $235 million for the quarter ended April 30. The mean estimate of analysts surveyed by First Call was for earnings, excluding items, of five cents a share. In the year-ago quarter, J.D. Edwards had net income of $12.3 million, or 11 cents a share. The company, which expects to release results May 26, also cited investments in product development, acquisition costs and the impact of staff additions made in the first quarter. Morgan Stanley Dean Witter analyst Chuck Phillips lowered its investment rating on J.D. Edwards to "neutral" from "outperform," citing weakness in the ERP sector. Phillips cut his fiscal 1999 earnings estimate to 13 cents a share from 59 cents and reduced his fiscal 2000 earnings estimate to 22 cents from 74 cents a share. While J.D. Edwards is "one of the stronger companies" in the ERP sector, "the company has to manage through the downturn and return to profitability by Q4," Phillips said. J.D. Edwards is the latest business-software maker to get bit by the year 2000 bug. Competitors PeopleSoft Corp. (PSFT), SAP AG (SAP) and Oracle Corp. (ORCL) all have cited year 2000 turbulence. "We had indicated last week that we felt a pre-announcement was possible," said Andrew Roskill, an analyst with Warburg Dillon Read in New York. "I don't think this reflects a J.D. Edwards-centric problem. I think it's a macro issue and it's hit virtually every company in the space." In 1997 and 1998, a lot of companies purchased packaged ERP applications to upgrade their systems and solve their year 2000 problem at the same time, Roskill said. "We had a bit of an acceleration of growth in those years, but typically these products take about 12 to 15 months to get up and running," Roskill said. By the fourth quarter of 1998, a new ERP-system purchase wouldn't help with the Y2K bug, he said. Besides the ERP vendors, other business software makers have also been hit by a combination of Y2K-derived spending changes and a shift among customers to buying Internet software. J.D. Edwards' shares had already slumped amid industry weakness, and fell another 8.8% to $12.25 Monday Despite its troubles, J.D. Edwards is well-positioned to ride out the uncertainties in its market, with more than $500 million in cash and investments, Roskill said. "I think there is going to be a recovery next year, but the real question is what happens over the next two to three quarters," he said. "To some extent we're all flying blind. The stock is only appropriate for true long-term value investors," he said. Copyright (c) 1999 Dow Jones & Company, Inc. All Rights Reserved.