JD Edwards has followed its fellow Enterprise Resource Planning (ERP) firms to report free falling profit amid a depressed global economy and increased competition.
The company also blamed its 33 per cent drop in first quarter profit to suppressed demand because of Year 2000 activities. Profit during the period ending 31 January fell to $4.3 million from $6.4 million last year. Net income per share was $0.04, down from $0.07.
Total revenue increased 25 per cent to $222.9 million, with the most significant hike being its service revenue, up to $153.3 million from $110.2 million in 1998.
Revenue from core business - licence fees - were almost static, up from $67.9 million to $69.6 million.
Travis White, vice president marketing if Europe, Middle East and Africa, said the company initiated a hiring programme in the fourth quarter and training ran into the first quarter. ?We expect to see their revenue contribution this quarter,? said White.
The first quarter was an expensive one for the ERP supplier. Operating income plummeted from $7.7 million to $1.7 million, not least because total costs and expenses rose from $170.5 million in 1998 to $221.3 million. The only decline was in the cost of licence fees, down from $11.1 million to $5.3 million. Service costs rose by almost $30 million to $99.5 million from $70.6 million; sales and marketing increased to $69.4 million from $50.4 million; general and administrative grew to $24.4 million from $18.4 million; and R&D was up to $22.7 million from $19.9 million. Travis attributed the high cost to the hiring and training programmes and the cost of servicing the customer base - around 5,000 worldwide.
?The outlook is positive and we see lots of opportunities with new function, technologies and platforms... but we have to be careful in our projections because 1999 is particularly unpredictable,? said Travis.
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