Md. tech fires 180 as loss worsens

Manugistics also announces mandatory leaves

October 04, 2001|By Stacey Hirsh | Stacey Hirsh,SUN STAFF

As it reported widening losses for its fiscal second quarter, Manugistics Group Inc. said yesterday that it has laid off about 180 employees, or 12 percent of its work force.

The Rockville software company also said it is implementing a mandatory unpaid leave program for remaining employees to trim costs, and is cutting travel expenses, professional services fees and outside contractors.

Even as its revenue increased, the company took a hit during the quarter that ended Aug. 31.

Revenue for its second quarter climbed 22 percent to $71 million, compared with $58.2 million in the second quarter of last year. Software sales slid 13 percent to $24.8 million, compared with $28.5 million a year earlier.

But Manugistics posted a net loss of $21.7 million, or 32 cents per share, for the fiscal second quarter, against a net loss of $19.7 million, or 34 cents per share, for the second quarter last year.

The company had about 10,000 more outstanding shares during this year's second quarter than last year's.

For the quarter just ended, Manugistics' adjusted net loss was $10.7 million, or 16 cents per share, compared with an adjusted net income of $1.4 million, or 2 cents per share, a year earlier.

Those numbers do not include amortization of intangibles and acquired technology, non-cash stock compensation charges or benefits, restructuring charges and related tax effects.

"This was a substantial and significant miss for the second quarter," said Eric B. Upin, an analyst with Robertson Stephens in San Francisco. "The software number was 50 percent below what we were looking for.

"And software licensing is the horse that pulls the cart. It has a long tail of consulting, training and maintenance dollars, not to mention additional revenue for more software in the future."

Manugistics also faces competition not only from the leader in supply-chain software, i2 Technologies of Dallas, but increasingly from such software giants as Oracle Corp. of Redwood City, Calif., and SAP of Germany, Upin said, adding: "You have to call into question management execution, especially with a miss of this magnitude."

Manugistics' shares rose $1.02 yesterday to $6.83. The earnings were released after the market close.

Gregory J. Owens, the company's chairman and chief executive officer, attributed the poor numbers to market conditions and economic uncertainty.

"It's totally the economy," he said. "What we saw this time was companies started to cut back on spending, and it affected the purchases of software and, obviously, reduced the revenue that we took in this quarter."

Owens added that the Sept. 11 terrorist attacks contributed to the tough business environment, making it more difficult to give financial forecasts. But he said Manugistics hopes its revenue will be $60 million to $65 million in the third quarter.

Manugistics is taking several steps to cut costs. The now 1,380-employee company laid off about 180 workers worldwide. The percentage of those cuts at the Rockville headquarters - where roughly half of the company's employees work - was unavailable yesterday.

The company's unpaid leave program requires all employees to take three unpaid days off every four weeks, which will mean a 15 percent pay reduction for workers. "It allowed us to keep more people employed, and we think it better positions us as the economy starts to turn back up," Owens said.

He was still upbeat about the business, saying it would likely be one of the first to rebound once the economy bounces back. "From an overall business standpoint, we still have more market momentum than any others in our software space," Owens said.

Sun staff writer Andrew Ratner contributed to this article.

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