Manugistics Narrows Loss

But Q2 software revenues drop sharply; president departs, more job cuts loom

Rockville, MD  September 27, 2002  Supply chain software bellwether Manugistics Group on Thursday reported narrower losses amid falling revenues in its second fiscal quarter and announced the departure of its president and further job cuts as it struggles to return to profitability in the weak enterprise software market.

Reporting on earnings for second quarter ended August 31, the company said its total revenues dropped 6 percent from the first to second fiscal quarters, from $74.6 million to $69.9 million.

However, Manugistics saw a steep 26 percent quarter-on-quarter drop in its software revenues, from $24.5 million to $18.1 million, as demand for the company's supply chain management software continued to lag.

Net loss for the second quarter was $13.1 million, down from $18.4 million for the previous quarter as cost-cutting measures announced earlier in this year apparently took hold.

Even as it reported its latest losses, Manugistics announced that its president, Richard Bergmann, who has been on a leave of absence since June, will depart the company "to pursue other business opportunities." No replacement has been named.

The company also said it would cut an additional 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's on top of the 12 percent reduction in workforce and contractors and other cost cutting measures announced in June.

In a statement on Thursday, Manugistics said it anticipates that total revenue for its fiscal third quarter will be relatively flat compared to the second quarter, but the company expects software revenue to increase slightly.

"While we are still feeling the effects of the recession and lower spending on technology, we are encouraged by the strong levels of sales activity and requests for proposals that we are seeing," said Greg Owens, the company's CEO, in a statement.

Owens' optimism may be justified. Information technology consultancy Aberdeen Group, in its recent survey of enterprises' IT buying intentions for the second half of 2002, reported that supply chain management applications  the core of Manugistics' business  remain a high priority for buyers looking to increase operational efficiency in the face of lethargic revenue streams.