Manugistics Sees Smaller Loss

Cost-cutting helps at supply chain solution provider, but revenues down, too

Rockville, MD  December 20, 2002  Supply chain software provider Manugistics this week reported lower sales but a smaller loss for its latest fiscal third quarter compared to the year-ago period, as cost-cutting measures failed to entirely make up for continued sluggishness in corporate technology spending.

Manugistics reported a loss of $26 million for the quarter ended November 30, compared to a $45 million loss in the same period last year. The company recorded sales of $62.4 million, down from $71.0 million a year ago.

Software revenue, viewed as a key indicator of future income, decreased 36 percent to $14.1 million from $22.1 million for the same period in the prior year.

Greg Owens, Manugistics' chairman and CEO, said in a statement that the company's cost-cutting efforts in the second and third quarters had more closely aligned Manugistics' expenses with expected future revenue levels.

In September, when the company announced its second fiscal quarter results, Manugistics said it would cut 10 percent to 12 percent of its staff and pursue further cost reductions in a bid to cut its expenses by $5 million to $7 million per quarter. That was on top of the 12 percent reduction in workforce and contractors and other cost cutting measures announced in June.

In light of the mixed news, Owens sounded a guardedly optimistic note looking forward, saying, "We are encouraged by our levels of sales activity, as well as several recent CIO surveys indicating that supply chain management is a high priority, however, we have yet to see corresponding upswings in closure rates."

In its statement on the company's earnings, Manugistics noted software wins in various industries over the past quarter, highlighting deals with BAE Systems, Lexmark, Mattel, the U.S. Navy and Xerox, among others.