The slumping economy has got even the robust supply chain management sector by the tail.
After the close of the stock market Wednesday, SCM software maker Manugistics Group Inc. announced a loss of $10.7 million, or 16 cents per share, for its second fiscal quarter ended Aug. 31. That compared with a net income of $1.4 million, or 2 cents per share, for the same period last year.
While Manugistics, of Rockville, Md., broke a seven-quarter positive earnings streak, its numbers came as no surprise. Last month, the company released its preliminary results suggesting per-share losses of between 14 cents and 16 cents. The only eyebrow raiser at this point is that actual numbers came in at the top end of that estimate.
Likewise, arch rival i2 Technologies Inc. is expected to report at midmonth losses for its third quarter. In July, the Dallas-based company reported losses of 16 cents per share, compared with a 5-cent-per-share profit for the same period last year.
On the upside, Manugistics second-quarter revenue did increase 22 percent to $71 million, from $58.2 million for the same quarter last year. Software revenues, however, dipped 13 percent to $24.8 million, from $28.5 million for the same period last year.
Greg Owens, Manugistics chairman and CEO, stated in an earnings release that late in the quarter, companies, including those that had appeared robust, became even more cautious and deliberate regarding commitments to capital spending. The Sept. 11 terrorist attacks on the United States did not help matters, according to Owens, who said the tragedy made it difficult to provide any specific economic guidance for the company moving forward.
Owens did suggest an internal target of $60 million to $65 million total revenue for the third quarter – which will result in a corresponding reduction in cost structure. While Owens did not report any specific layoff numbers, the company has been on a roll with cost-cutting measures.
Since the end of its second quarter, Manugistics has cut about 12 percent of its staff, instituted a mandatory unpaid leave program, and reduced the use of outside contractors, professional services and employee travel.
AMR Research analyst Gerald McNeary reported that a period of entrenchment for Manugistics and i2 gives enterprise resource planning vendors like SAP AG, Oracle Corp. and PeopleSoft Inc. the opportunity to make further inroads on both companies SCM turf.
"Time is not on the side of best-of-breed vendors, which face a more competitive environment where ERP suite vendors provide users with just enough functionality," said McNeary in an AMR report.