Enterprise resource planning software company JD Edwards has announced plans to lay off 800, or around 13 per cent, of its global workforce.
The shock announcement came just two days before the company is scheduled to make a quarterly earnings announcement. In addition to the redundancies, JD Edwards is also dropping its application service provider initiative.
The announcement said that costs were out of line with revenue, but sources close to the company said there has been a general failure on the part of the marketing and sales teams to get any significant sales activity on JD Edwards' partnered deal arrangements with Siebel Systems for customer relationship management and Ariba for e-procurement.
Investors have been told that licence revenue for the first half of this year has grown by 20 per cent. Revenue for the fourth last quarter is expected to be in the $225m to $235m range - flat compared with 1999, but with an operating loss of $20m on the quarter.
Wall Street had predicted JD Edwards to deliver accelerated earnings in the wake of the partnering deals first announced a year ago because the company is in a hot growth area. However, despite intensive training and a series of marketing initiatives, JD Edwards has made few announcements about its Siebel relationship and has been almost completely silent about Ariba.
JD Edwards is cutting the management levels from nine to six and the redundancies are expected to include some quite senior people.
In Europe, the Middle East and Africa region, Trevor Salomon, European marketing director, confirmed that 88 jobs would be lost. "At times like this it is all too easy for companies to make a knee-jerk reaction. That has not happened here," he said.
Last month Doug Massingill was ousted as chief executive and Ed McVaney, one of the company's founders and a previous chief executive, stepped back into the top job. Insiders at the company said: "Massingill was deemed not to have made the grade in what has turned out to be a very difficult year for enterprise resource planning vendors like us."
At the time of Massingill's departure, there was almost open warfare between different sales groups - a situation neither Massingill nor Dave Girard, chief operating officer, could control. "These people did not want to be managed," said the source. This time last year, JD Edwards re-organised its sales teams along vertical industry lines and increased sales head count significantly."
Bruce Richardson, senior vice president research strategies at AMR Research, said: "I think Ed McVaney is signalling to the market that he's fighting mad and that he intends to get JD Edwards' house in order."
Lately, JD Edwards has switched stories, preferring to concentrate on its ebusiness strategy. Michael Schmitt, senior vice president for ebusiness, has recently gone on an offensive aimed at persuading potential customers that rival Oracle has little to show for its ebusiness efforts. The campaign, called Larry is Absurd, is Schmitt's personal creation. "Is it me or is Larry E the grench who stole ebusiness? What product or credibility does he have for the huge requirements under the water line of ebusiness," said Schmitt.
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