Enterprise application vendor JD Edwards' stock price tumbled last night, despite the company beating Wall Street estimates in its third financial quarter.
The company closed its third quarter to 31 July with a net loss of $22.6m, down from a loss of $33.2m a year earlier. Revenue was up 12.5 per cent from the same period last year, to $261.1m. But the market was not impressed and in after hours trading, shares fell nearly 20 per cent from $23.5 to $19.
In yesterday's filing, JD Edwards noted that restructuring costs, first announced on 22 May, are expected to total $40m. In the third quarter, it reported a restructuring charge of $30.1m, so in its final quarter of the current financial year the company expects to post a further $9.9m write off.
In addition, the company footed an $84m bill during the last quarter for stock repurchase and extended its line of credit by $100m. Taken with the effect of losses on cash flow, JD Edwards' overall cash position at 31 July fell by $101.9m to $320.5m.
The company put a gloss on the figures, however, reporting that licence revenue rose 56 per cent in the period to $116m and that at the operating level, it has returned a modest profit of $1m in the period compared with a loss of $14.7m this time last year.
But the cost of licence sales also grew from 10 per cent of sales to 13.2 per cent, an indication of the impact of third-party software sales it generates from a reseller agreement with Siebel Systems. JD Edwards has warned that the impact of third-party sales costs will continue. Despite the company seeking to reduce its cost base, all other costs rose in the period.
On the upside, JD Edwards reported that more than half its licence transactions were above $1m, largely due to its sales of extended supply chain and business-to-business marketplace solutions.
With the return of Ed McVaney as chief executive, the company has laid off more than 800 staff, some from senior positions, and has lost several management layers. The latest head to roll was that of Mike Schmitt, who headed up JD Edwards' ecommerce business unit.
Schmitt had planned to take a year out at the end of this year, but left on 31 July after not being allocated more than a small fraction of the 200 staff he was promised to support the company's ebusiness efforts. There has been no announcement about a replacement.
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