Manugistics stock makes surprise jump of 33 percent

Takeover rumors seen as primary impetus

October 26, 2002|By Andrew Ratner | Andrew Ratner,SUN STAFF

At lunch with a client in New York yesterday, analyst Bert Hochfeld discussed whether it was a good time to buy shares of Manugistics Group Inc., a software company based in Rockville that has struggled for months.

By the time they returned to the office, they were startled by the ticker: The stock had jumped 40 percent. It ended the day up 78 cents, or 33 percent, to close at $3.17, as the fourth-largest percentage gainer on the Nasdaq stock market.

Manugistics develops software that helps companies better track their "supply chain" of products, from the suppliers that sell the raw materials to customers who buy the finished product.

"We were shocked," said Hochfeld of Montauk Capital Markets. "It's obviously a takeover rumor. It is being bought like you've got to own it today."

Manugistics announced yesterday morning that William H. Janeway, vice chairman of Warburg Pincus LLC, a large equity firm, had joined its board.

With his appointment, Warburg Pincus agreed to increase its stake in Manugistics to 19.9 percent from 10.9 percent. Manugistics also announced that Hau L. Lee, a Stanford Business School professor, had resigned from the board two years before his term expires.

More likely, the stock jumped in reaction to an item by Briefing.com, an investment Web site, of a rumored takeover by competitor PeopleSoft Inc. of Pleasanton, Calif. PeopleSoft closed up 5 cents, or 3 percent, at $17.72 yesterday.

Representatives of Manugistics, PeopleSoft and Warburg Pincus declined to comment on the item.

Timothy M. Klein, an analyst with U.S. Bancorp Piper Jaffray in Minneapolis, said he doubted the report. He questioned why Warburg would become more involved in management of Manugistics if a sale was imminent.

Because companies have greatly reduced spending on information technology this year, Manugistics has fallen hard despite having clients such as Coca-Cola, Kraft and Circuit City.

The company has laid off hundreds this year, its president has resigned, and it required all employees to take a week of unpaid leave in the summer. Its stock sold for $65 a share two years ago.

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