i2 Technologies signed a number of deals in the last financial quarter, with customers that included Sun Microsystems, but the supply chain vendors total revenues dropped for both the quarter and the 2004 financial year.
In response, i2 Technologies Inc. will keep cutting costs while undertaking a reverse stock split and promoting its latest solutions to both new and existing users, said Sanjiv Sidhu, chairman and CEO.
In financial results released Wednesday, i2 reported revenue of $84 million for the fourth quarter of 2004, compared with $98 million for the fourth quarter of 2003. Total full-year revenue for 2004 was $59 million, in contrast to $85 million for 2003.
But in a conference call with financial analysts on Wednesday, Sidhu said these results are “not acceptable to any one of us.”
“As we enter 2005, we see a [supply chain] market dramatically different from the past few years. This change represents an opportunity for i2,” according to Sidhu. However, Sidhu acknowledged that i2s financial results are not yet keeping pace with these opportunities.
In a statement announcing the results, i2 also said the companys board of directors has 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.
During the conference call on Wednesday, Sidhu indicated that i2 views the Nasdaq listing as a factor in retaining and attracting customers.
Sidhu said that i2s current lack of a Nasdaq listing is a concern raised frequently by users.
i2 had been delisted from Nasdaq as the result of an internal audit, completed in July of 2003, that required the company to restate its earnings for the past four years. i2 expects to implement the stock split on Feb. 16, 2005. After that, the company will start the application process for relisting on Nasdaq.
On the plus side, i2 ended the fourth quarter cash-flow positive, a situation officials attributed to a strong focus during the fourth quarter on renewing maintenance contracts with existing users.
On Dec. 31, 2004, i2s cash and investments totaled $286 million, a net increase of $4 million over the balance on Sep. 30, 2003. In addition, license revenues for the quarter were $17 million, in contrast to $15 million for the fourth quarter of 2003. One of the deals signed during the fourth quarter was for over $1 million.
i2 currently has 66 active projects with customers, said Katy Murray, i2s chief financial officer, also during the call.
New customers signed during the fourth quarter include U.S. Foodservice; Nissan North America Inc.; Asia-based DongbuAnam in the high-tech industry and Oji Nepia in the paper industry; and metals companies China Steel Corp., NTN Corp. and Aluminum Konin-Impexmetal S.A.
Nissan is using i2s Factory Planner to gain better visibility into its manufacturing processes, according to Sidhu.
Also during the Wednesday call, Sidhu announced Sun Microsystems Inc. as a customer for the companys i2 HAZMAT application for hazardous materials management.
During the recent NRF (National Retail Federation) show, i2 experienced an eightfold increase in customer meetings over the previous year, he said.
Sidhu also said that 19 of the “Top 25 Global Supply Chains” recently named by AMR Research belong to companies who are current i2 customers.
Also during the fourth quarter, Texas Instruments Inc. became the latest customer to join i2 Supply Chain Leaders, a program that lets companies use all of i2s “intellectual property” over an agreed-upon contract term.
In a Q&A session, officials were asked whether the Supply Chain Leaders program represents a way of gaining cash up front for maintenance fees.
Sidhu replied that the economics of the program “go way beyond maintenance.” Customers are also getting “new solutions,” he said.
“While you may get cash up front, prepaid maintenance is not a bad thing,” Murray added.
i2 is also in the process of recruiting both a new CEO and more salespeople, according to Sidhu. However, i2s cost-cutting measures over the next quarter might include some layoffs, officials said during the conference call. i2 currently has about 80 salespeople on board, Murray said.
Sidhu told the analysts that i2s “sense of urgency continues” around hiring a new CEO. The matter is “a top priority for me and i2s board of directors,” according to Sidhu.
Editors Note: This story was updated to include more information from i2s conference call with analysts and from written statements by the company.
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