Update: I2 earnings drop, layoffs planned

Computerworld - Supply chain and business-to-business software vendor i2 Technologies Inc. Tuesday announced third-quarter revenue of $194 million, down from $241 million in the previous quarter, and said it plans to lay off about 1,000 employees by early next year.

The company also said it posted a $4.7 billion charge against intangible assets for acquisitions.

I2's third-quarter revenue was down compared with the $320 million in revenue it posted in the same quarter last year.

In a statement, i2 CEO Greg Brady pointed to last month's terrorist attacks in the U.S. as one reason for the company's slump.

"We faced extremely challenging market conditions throughout the third quarter," Brady said. "The attacks on Sept. 11 further compounded the recession-like environment we are already experiencing, causing customers to postpone or cancel projects and disrupting sales cycles."

The earnings announcement was, in the words of Karen Peterson, an analyst at Stamford, Conn.-based Gartner Inc., "ugly but not surprising. Their numbers were in line with expectations. However, the biggest concern is their recent loss of market mindshare, as they now appear vulnerable."

"The problems at I2 are bigger than the economy or the post-September 11 effect," said Joshua Greenbaum, analyst at Enterprise Applications Consulting in Daly City, Calif. "The fundamentals of the company's business model are in question. Big ticket supply chain management solutions are out of vogue now, and, try as it might, I2 doesn't have much else to fall back on.

"While I believe the bottom is near for a lot of companies in the enterprise software space, I2 is looking like one of the companies that has a lot further to fall than the rest," he said.

Total pro forma operating expenses for the quarter were $282 million, including operating expenses of RightWorks, an acquisition the company completed in late August. That represented a 19% sequential decline from second-quarter expenses of $348 million. On a comparable pro forma basis, total operating expenses were in line with the $278 million reported for the third quarter of last year.

I2 reported a pro forma net loss of 13 cents per share, in line with First Call consensus estimates for the quarter, compared with net earnings of 7 cents per share for the third quarter last year. The company also reported a net loss of $5.526 billion, or $13.25 loss per share, "with most of this reported net loss resulting from the amortization and write-down of intangible assets."

That compared with a net loss of $756 million, or $1.91 per share, for the third quarterof last year.

I2 didn't spell out what areas of the company would be hit by the planned layoffs.

Marc L. Songini contributed to this report.

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