Dallas April 19, 2001 The expectations were lowered, but they were met. A few weeks after revising its Q1 revenues downward from four cents to two cents per share, supply chain and marketplace solutions provider i2 Technologies announced yesterday that its full results for the first quarter of 2001 clocked in at just that reduced level.
i2 performed well this quarter despite the beginning of a down cycle in the economy, said Sanjiv Sidhu, i2 chairman and CEO. In this slowing economy, where companies are more focused on bottom-line results and profitability, our customers are realizing the value and efficiencies i2 solutions can create for themselves and their trading partners. And that's not just CEO spin. License revenues for i2 grew 86 percent over the first quarter of 2000 to $211 million from $114 million, and first quarter 2001 total revenues grew 91 percent to $357 million from $186 million in 2000. Financial results for the first quarter of 2000 do not include the results of Aspect Development, the acquisition of which was completed on June 9, 2000 and accounted for as a purchase.
i2 recognized strong license revenues from existing customers in the quarter, especially in the high-tech sector, where companies such as Lucent, Sun Microsystems, Matsushita Electric and Applied Materials made additional purchases, developments the company called a strong sign of continued commitment and recognition of the value that i2 solutions deliver.
It is obvious that the business climate has changed for the worse, said Bill Beecher, i2 chief financial officer, who sounded more like a cognizant executive than whining apologist, as Oracle's Larry Ellison did when he laid the blame for his company's shortfall at the feet of the economy. Beecher went on to say, On April 2, we announced plans to reduce our workforce by about 10 percent, as part of an effort to bring our total expenses in line with our current business outlook. We acted swiftly and have already reduced our staff by over 600. We continue to work throughout the company to reduce costs as part of our overall restructuring.
According to Bob Ferrari, senior research analyst at AMR Research, i2 is not exactly in dire straits, explaining, If you look at the numbers, they're not too bad. I mean, a 94 percent growth rate in sales, there are a lot of companies that would really be pleased with that right now. And what they still indicate is that the pipeline is still robust.
Ferrari believes that i2 is taking steps to correct what might be called a surplus of enthusiasm, particularly in the area of headcount and infrastructure. I think they were trying to make a jumpstart and get way ahead of where they really wanted to go, and then I think the reality of the market hit them a little bit.
Ferrari also gave credence to Beech's explanation of the effects of a softening economy. Already we're beginning to see that not only i2 but other software companies are now going back to basics. They're saying, All right, we need to refocus on the value proposition for our products, on the methodologies we use for return to businesses, and the templates of how we implement our products.' These are all signs that we're going into a different type of market here. A market that's much more focused on looking at value right now in the budget window. Supply chain is still an area of a lot of interest, because this is where a lot of companies feel there is cost opportunity, the opportunity to take cost out of the equation here.