i2 Has Rough Quarter

The supply chain management software maker saw sales halved and losses mount and is cutting 30 percent of its positions.

Sales were down and losses remained large in the second quarter at supply chain management software maker i2 Technologies Inc. Still, when the company announced second quarter earnings late Tuesday the results fell in line with preliminary projections made two weeks ago.

i2 reported total revenues for the quarter ended June 30, of $120 million, compared with $249 million for the same quarter last year. Software license revenues totaled $26 million in the most recent period, versus $106 million for the year-ago quarter.

As a result, i2 reported a GAAP loss per share of $1.77, including a $671 million charge to take a valuation allowance on deferred tax assets. For the second quarter in 2001, the Dallas-based company reported a loss of $2.08 per share. The net loss would have been $78 million, or 18 cents per share, in the recently completed quarter had it not been for amortization, restructuring and other special charges, the company said.

i2 is implementing a major restructuring that will include a 30 percent reduction in headcount across the board. Product development and sales efforts will be focused on the companys major solution suites – supply chain management, supplier relationship management and demand planning, officials said.

Furthermore, the company will look to streamline its product offering by removing product overlaps and providing some minor software products as tool kits and eliminating others. Likewise, i2 will reduce the amount of hardware and middleware stacks it supports, thereby reducing development and support costs.

"What products do we plan to cut? We plan to support all of the major product lines," said Sanjiv Sidhu, founder and CEO of i2. "In areas where we do have overlaps we will offer alternative solutions to customers.

Additionally, the company will restructure its Solutions group, compensating on profit and customer satisfaction.

"Services is a new organization," said Sidhu. "It is closer to the customer and more profit focused. For example, our supply chain management group will be measured by the quality of the product, with the revenues of the product subtracted by the expenses it takes to develop the product."

In regard to development, i2 will continue to move U.S. engineers to its India-based development center.

"We are intensely focused on returning the company to profitability as quickly as possible," said Sidhu. "We will be aligning our sales efforts, product development and delivery for maximum business efficiency, while never losing sight of our customers."

Wins for i2 in the second quarter included companies in i2s major industry sectors, high tech manufacturing, retail and automotive, among others. The company reported 77 customer go-lives, including adidas-Solomon AG, Barnes & Noble, Bell Helicopter Textron, Nippon Steel, SGI and Siemens.