i2 Names CEO, Delays Return to Nasdaq

Michael E. McGrath becomes interim president and CEO, while Sanjiv Sidhu stays on as chairman. A round of job layoffs looms in 30 to 45 days.

Michael E. McGrath, newly named interim president and CEO of i2 Technologies, predicted this week that the vendors return to profitability will be eased by a growing "blurring of distinctions" between enterprise resource planning and best-of-breed supply-chain software.

Yet meanwhile, i2 Technologies Inc. has put a temporary hold on previously announced plans to return to Nasdaq, and company will start a round of job layoffs in 30 to 45 days, according to McGrath.

"i2 has always been one of the thought leaders [in supply chain software]," McGrath said in an interview with eWEEK.com. "But we need to make some fundamental changes to be more efficient."

In announcing McGraths new title on Monday, i2 co-founder Sanjiv Sidhu said in a statement that after "establishing a strong foundation for further growth," McGrath will give up his position as CEO and will replace Sidhu as chairman of the board. Sidhu announced his decision to step aside last July.

McGrath, a longtime veteran of the supply-chain industry, joined the financially struggling best-of-breed player as an independent director last August. In July, he retired from his position as chairman and CEO of the Atlantic region at PRTM (Pittglio, Rabin, Todd & McGrath), a supply-chain consulting firm he co-founded 28 years ago. McGrath also founded IDe, a development chain solutions firm, in 1998.

McGrath told eWEEK.com this week that his top priority is to "regain the confidence" of customers and shareholders by returning i2 to profitability. McGrath said he hasnt yet fleshed out the details of his strategy.

Hell first need to drill down deeper into evaluating the market and the challenges ahead. But essentially, the plan will revolve around "refocusing i2s solutions," in addition to restructuring the company.

"i2s had tremendous success with some customers," McGrath said. "They havent just gotten results. Theyve gotten big results."

He added that i2 will look to expand on this success with offerings such as additional software products and consulting services, while also taking better advantage of "a number of opportunities" with other potential users.

In financial results reported in early February, i2 showed a drop in revenues both for the fourth quarter of 2004 and for the 2004 fiscal year, despite signing at least seven new customers—including U.S. Foodservice and Nissan North America Inc.—and renewing maintenance contracts with existing users during the quarter.

Like some other best-of-breed software vendors, including Manugistics Inc., i2 has been losing market share in recent years to specialty toolmakers, as well as to large ERP (enterprise resource planning) players such as SAP AG and Oracle Corp.

/zimages/2/28571.gifRead more here about i2 Technologies financial standing.

But McGrath told eWEEK.com that i2s path to regained profitability will be smoothed by the dynamic nature of the supply-chain market, as well as by trends toward simplified software configurability and increasingly fewer differences between ERP and best-of-breed supply-chain solutions.

"The [supply chain] market is not stagnant and mature," McGrath said. "If youre running a supply chain, you want the best available. You can get into the tradeoffs [among products], but one of the trends for the future is that the distinctions are going to be blurred."

"Supply-chain software is getting simpler to configure, and theres improved interoperability between that and more generic solutions. The battle between ERP and best-of-breed is going to become just a salesmans battle, instead of a real architectural battle."

/zimages/2/28571.gifClick here to read about supply-chain predictions for 2005.

In announcing i2s financial results last month, i2 officials also said the companys board of directors had approved a stock split of the companys outstanding common stock at a 1-for-25 ratio, in order to return i2s share price to a level that will satisfy minimum bid price requirements for relisting the stock on Nasdaq.

i2 had been delisted from Nasdaq due to an internal audit, completed in July 2003, that required i2 to restate its earnings for the past four years.

i2 implemented the stock split, as intended, on Feb. 16, 2005. But completion of plans to rejoin Nasdaq have now been delayed by the need—under Nasdaq stipulations—to fill McGraths now-vacant slot on i2s board with "another independent director or two," McGrath told eWEEK.com.

"We are ready to apply [to Nasdaq]. But I kind of messed things up," he quipped. For i2 to rejoin Nasdaq, more than half of the companys directors will need to be independent directors, according to McGrath.

McGraths other accomplishments in IT include establishing the SCOR (Supply-Chain Operations Reference) model in 1993. The Supply Chain Council now manages SCOR as an industry standard.

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