Supply chain vendor i2 Technologies has been forced to acknowledge that sales execution problems may hamper growth for the remainder of the year.
As a result, the company is looking to reposition itself as an Internet play. Total revenue for its second quarter of $131.4 million showed growth of 57 per cent over second quarter 1998 revenue, while net income was $8.5 million compared to $0.6 million in the same period last year. The analyst consensus expected revenue to come in slightly lower at $125 million.
License revenue increased 50 per cent to $79.2 million, while services advanced 69 per cent to $36.3 million. Significantly, costs associated with service and maintenance revenues rose sharply so that their overall margins declined from 46 per cent to 40 per cent.
Although i2 was not specific about the reasons for this fall, it is clear that i2 is ramping up services related to its ebusiness activities. This is part of i2's move away from delivering demand planning applications to predominantly high tech customers, in an effort to capture wider markets.
Although Sanjiv Sidhu, i2's chief executive officer repeated that there are no unusual factors affecting the forward sales pipeline, two issues emerged that may impact the full year results. First, Sidhu admitted there has been a problem recruiting the numbers of appropriately qualified sales staff needed to accelerate sales.
"The head count increased by two persons between Q1 and Q2," he said, adding "We expect to add a further 50 by the end of the year."
Second, although i2 has expended a lot of marketing effort about its ebusiness 'public and private exchange' services, the only evidence of success so far is the joint announcement with Hewlett Packard that it has developed an, "intelligent eBusiness portal solution for electronics distributors that facilitates the timely sharing of information within an entire trading community."
Both aspects of potential problem are critical to i2 because it has to further distance itself from the image of old style ERP or even older MRP type systems and show true differentiation in what is a potentially huge market. The sales force recruitment problem is not unique to i2, although Sidhu conceded it is a potential constraint on the business.
"I continue to believe we are sales force constrained," he said.
Similarly, Sidhu acknowledged there is a huge education process to get industry communities to understand the value to be derived from collaborative planning and fulfilment with the portal as the window to the end customer.
Looking forward, Sidhu said i2 is creating new vertical applications that will feed back into the ebusiness initiatives, pointing to insurance and financial services as new markets that are collateral to automotive.
Antarctica lost on average 252 gigatons of ice mass per year from 2009 to 2017, claims study
Buyers can demand refunds if they've had a game for no more than 14 days and not registered more than two hours of play
Total lunar eclipse 2019: 'Super Blood Wolf Moon' to be visible across Europe and North America on Sunday night
Moon will turn reddish-orange in colour during this weekend's total lunar eclipse
Hackers to compete for prize money of between $35,000 and $250,000 cracking the Tesla Model 3 at this year's Pwn2Own contest