Customer hesitancy blamed for i2's 'unacceptable' losses

22 July 2002
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23 July 2002 | Robin Parker

Supply chain software vendor i2 has blamed a drastic slump in revenues on last-minute hesitancy among customers.

The company said that although 77 new customers went live with its software in the last quarter, more than 55 per cent of deals due to be signed were pushed back at the last moment.

Sales of software licences for the quarter ending 30 June fell 75 per cent year on year and revenues dropped by 52 per cent to $120 million.

Chief financial officer Bill Beecher said the losses were "unacceptable" and expressed concern over the weak spending market.

i2 announced a major restructuring to combat the losses and to reduce its operating costs by 30 per cent by the end of the year, but it will cost more than $50 million in the next quarter to cover this.

The company is to lay off 1,400 staff, nearly a third of its workforce, by the end of the year, on top of the 1,600 job cuts made in the past 18 months.

The company had already had to readjust in April, when Greg Brady resigned as chief executive, a role now assumed by founder and chairman Sanjiv Sidhu.

The vendor has also set a cost-cutting goal for 50 per cent of its software development to be conducted in India.

But it placed most of its hope in a resurgent customer market, which it aims to target with an improved and more focused product portfolio.

Beth Barling, senior analyst at AMR Research, welcomed this increased focus, which should deliver huge savings in development costs.

"i2 have a very broad portfolio of products, but companies have not always implemented all of them," she said.

"All vendors are suffering from reduced spending, and this rethink is a good sign that they are now forced to look at their software portfolios and atways to be more 'buyer-friendly'."


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