Earnings Roundup

PeopleSoft, SAP see profits, but e-procurement players still seeing red

Tempe, AZ  February 3, 2002  The latest earnings season brought mixed results for supply chain solution providers, with such major players as PeopleSoft and SAP  along with a handful of smaller providers  posting profits, while such industry stalwarts as Ariba and Commerce One continued to see red.

Overall, the trend was toward lower earnings for the quarter ending December 31 compared with the same period of 2001. Nevertheless, several companies clearly were able to restrain their costs and maintain profitability in spite of the harsh information technology investment climate. Others, however, were not so lucky.

Following are summary results for Ariba, Aspen Technology, Commerce One, Epicor, i2, PeopleSoft, SAP, SciQuest, Technology Solutions Co. and Vitria.

Ariba

Sunnyvale, Calif.-based Ariba, reporting on the first quarter of its 2003 fiscal year, said that its net loss for the quarter, calculated in line with generally accepted accounting practices (GAAP), was $55.9 million, against a net loss on a GAAP basis of $157.7 million for the same period of its 2002 fiscal year. Net loss for the 2003 quarter included amortization charges totaling $68.8 million.

Revenues for the first quarter of fiscal 2003 stood at $62.0 million, up from $55.3 million for the same quarter of 2002.

Aspen Technology

Cambridge, Mass.-based Aspen Technology, a provider of enterprise software to the process industry, reported a net loss for its fiscal 2003 second quarter of $136.9 million on a GAAP basis, including restructuring charges totaling $135.2 million. That compares to a net loss of $102 million for the second quarter of fiscal 2002 (ended December 31, 2001).

Total revenues for the second quarter came in at $83.0 million, with license revenues rising 24 percent against the previous quarter, to $36.8 million. That compares to revenues for the second quarter of fiscal 2002 totaled $87.0 million, including $39.9 million in software license revenues.

Commerce One

Pleasanton, Calif.-based Commerce One reported a net loss on a GAAP basis of $279.5 million for the fourth quarter of 2002, compared to a loss of $36.3 million for the third quarter of 2002 and a loss of $168.3 million for the fourth quarter of 2001.

Revenues for the current quarter totaled $19.5 million, compared with $26.4 million for the third quarter and $56.0 million for year-ago quarter,

For the full year 2002, the company reported a net loss of $590 million, versus a loss of $2.6 billion for 2001. Revenues for all 2002 were $105.5 million as compared with 2001 full-year revenues of $408.7 million.

In making its earnings announcement, Commerce One also said it would reduce its total headcount to approximately 300 employees by the end of the first quarter of 2003. The remaining employees will be focused primarily around the deployment of the new Commerce One 6.0 Conductor platform. At the end of the third quarter, the company employed approximately 1,100 people.

Epicor Software

Epicor Software, of Irvine, Calif., reported net income of $2.1 million for the fourth quarter of 2002, after restructuring costs and other charges, compared to a net loss of $1.4 million in the previous quarter and a loss of $2.7 million in the fourth quarter of 2001.

Epicor, which provides a variety of e-business solutions for midsize companies, reported total revenues of $36.7 million for the fourth quarter of 2002, compared to $34.0 million reported in the previous quarter and $40.0 million for the fourth quarter of 2001. Notably, revenues from software licenses, which analysts view as a sign of future revenues, rose in the fourth quarter of 2002 to $9.8 million from $6.8 million in the previous quarter, an increase of 44 percent.

For all of 2002, Epicor reported a loss of $3.0 million, against a loss of $28.7 million for the previous year. Total revenues for 2002 came in at $143.5 million, against $174.5 million for 2001.

George Klaus, chairman, CEO and president of Epicor, said in a statement that he was pleased with his company's ability to achieve profitability and generate cash for five consecutive quarters, but he warned that "the selling environment remains challenging" and predicted a slight decrease in 2003 revenues to $135 million.

i2

Dallas-based i2 reported preliminary results for its fourth quarter, pending the results of a re-audit of its financial statements for 2000 and 2001.

Including a $23 million restructuring charge, the company reported a net loss of $12.4 million for the fourth quarter, on revenues of $120 million. i2 said that a comparison of fourth quarter results with previous periods would not be possible until it completes the re-audit.

Cash and liquid investments decreased $69 million in the quarter to $457 million, according to the company. In a statement, Sanjiv Sidhu, i2's chairman and CEO, expressed satisfaction with the results. "I believe we have turned the corner on a very difficult period," Sidhu said.

Regarding the re-audit, the company said in a statement: "The audit committee of its board of directors has engaged Deloitte & Touche, the company's current external auditors, to re-audit the company's financial statements for the years ended December 31, 2000 and 2001. This decision was made at the recommendation of management based on recent information developed during the audit committee's ongoing investigation of certain allegations regarding the company's revenue recognition with respect to certain customer contracts and its financial reporting for those years."

Defunct Arthur Andersen was the company's external auditor for those years. Deloitte & Touche replaced Arthur Andersen as the company's external auditor in May 2002.

PeopleSoft

PeopleSoft, based in Pleasanton, Calif., reported net earnings of $57.4 million for the fourth quarter of 2002, up significantly from the third quarter, when net income came in at $44.6 million, but down slightly from the company's 2001 fourth quarter net earnings of $57.8 million.

Total revenues for the fourth quarter stood at $512 million, versus $471.2 million for the third quarter and $539 million for the year-ago period.

For all of 2002, PeopleSoft saw net income of $182.6 million, against $191.6 million in 2001. Revenues for 2002 totaled $1.9 billion, compared to $2.1 billion for 2001.

"PeopleSoft delivered strong results in a difficult year," said Craig Conway, the company's president and CEO. "Looking ahead to 2003, PeopleSoft is extremely well positioned to succeed in any economic climate."

SAP

German enterprise software provider SAP saw a net profit of 474 million euros for its fourth quarter, up from 319 million for the same period of 2001.

The euro was trading at about $1.07 as of midday today.

Fourth quarter 2002 revenues totaled 2.28 billion euros, against 2.32 billion euros for the same period of 2001. Notably, software sales dropped 7 percent, to 958 million euros, in the fourth quarter.

For all of 2002, net income came in at 509 million euros, down from 581 million euros for 2001. Total revenues for 2002 hit 7.4 billion euro, up 1 percent from 2001's result of 7.3 billion euros.

"For the fourth quarter we continued to see the trend toward smaller deal sizes, but with customers making larger, more strategic commitments," said Henning Kagermann, co-chairman and CEO of SAP AG.

SciQuest

SciQuest, a provider of e-procurement solutions to organizations in the life sciences, research and higher education markets, reported a net loss, on a GAAP basis, of $8.8 million for the fourth quarter, against $5.7 million in third quarter and $15.3 million for the same period of the previous year. Fourth quarter revenues from licenses and other professional services stood at $1.7 million, even with third quarter revenues (also $1.7 million), and down from $2.3 million for the year-ago period.

The company's net loss before charges for the full year of 2002 was $70.8 million on a GAAP basis, compared to a loss of $82.8 million in 2001. As a result of accounting changes, the net loss for 2002 included non-recurring, non-cash charges totaling $48.3 million.

For the full year of 2002, SciQuest reported revenues of $7.2 million, compared to revenues of $23.2 million for 2001. The company said the decline was expected and was primarily due to a shift to a software license and services fee model from a product distribution model that generated gross revenues from processed transactions. In 2001, revenues from licenses and other professional fees were $7.0 million and revenues from e-commerce transactions were $16.3 million.

Stephen J. Wiehe, CEO of Research Triangle Park, N.C.-based SciQuest, highlighted in a statement the increase in the company's recurring revenues. "We have dramatically increased our level of recurring revenue over the past year," he said. "In the first quarter of 2003, we anticipate that nearly 50 percent of our revenue will be recurring, compared to approximately 20 percent in the first quarter of 2002."

Technology Solutions Co.

Chicago-based systems integrator Technology Solutions Co. (TSC) reported net earnings of $447,000 for the fourth quarter, down from $540,000 for the previous quarter but about in line with the $455,000 earnings for the year-ago period.

Revenues before reimbursements for the fourth quarter came in at $17.0 million, against $19.1 million for the third quarter and $25.8 million for the same period of the previous year.

For all of 2002, the company saw net earnings of $1.2 million, compared to a loss of $8.9 million for the previous year. Total revenues for 2002 stood at $83.0 million, against $126.4 million against in 2001.

"The IT services market remains depressed and may continue that way throughout most of 2003," said Jack Hayden, president and CEO of TSC, in a statement in which he also announced two new business offerings, the Performance Economics Institute and the federal government practice.

Vitria

Vitria, based in Sunnyvale, Calif., reported a GAAP net loss of $12.0 million for the fourth quarter of 2002, up from a net loss of $11.1 million for the previous quarter but down from the $13.7 million net loss reported for the fourth quarter of 2001.

Revenues for the fourth quarter of 2002 were $20.1 million, compared with $26.0 million in the third quarter of 2002, and against $35.2 million for the fourth quarter of 2001. License revenue came in at $6.0 million in Q4 2002, compared with $10.0 million in the third quarter and $21.0 million for the same period of 2001.

"Part of the revenue shortfall for the fourth quarter was due to some substantial deals that have slipped into the first quarter," said JoMei Chang, CEO of Vitria. "One of those large deals that closed in January is a $5 million order with a premier customer. We remain cautious regarding the IT spending environment and believe it is too early to declare this increase in business activity a trend."

Vitria reported a net loss of $91.3 million for all of 2002, against a loss of $53.6 million for 2001. Revenues for 2002 came in at $97.3 million, versus $135.0 million in 2001.

Gary Velasquez, president and CFO of the company, said Vitria had reduced its cost structure by approximately $70 million on an annualized basis since January 2002. "In the coming quarters we will continue to focus on cost controls, as well as increase the level of sales activity with our new solutions for the healthcare and financial services vertical markets," Velasquez said.

Still to Come

Not reporting in yet is Manhattan Associates, based in Atlanta, which is slated to announce fourth quarter results on February 11. Rockville, Md.-based Manugistics' fiscal year runs through the end of February, and J.D. Edwards' next report, due on February 20, will cover its 2003 first quarter, ended January 31. Agile Software's next report will cover the third quarter of its fiscal 2003 year, also ending January 31.

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