- The Washington Times - Tuesday, October 1, 2002

Shares of Manugistics Group Inc. sank more than 30 percent last week after the software maker said quarterly losses were more than double those of a year ago.
On Thursday, the Rockville-based company reported a second-quarter net loss of $47.7 million (68 cents per share) compared with $21.7 million during the like quarter a year ago.
Shares closed yesterday at $2.79 on the Nasdaq, up 15 cents from Friday but down $1.19, or 29.9 percent, since Wednesday.
Analysts said the increased net losses were not solely responsible for the drop in share value, because they were expected. Unexpected was a 5.2 percent decrease in sales during the quarter. Sales were $69.9 million, about $1 million less than analysts' estimates. Particularly hard hit were license sales, which were $18.1 million, or about $5 million less than estimates.
When business will rebound for Manugistics and software makers as a whole is anyone's guess, analysts said. Some indicate a rebound could occur by the end of the year; others say it will be 2003 before any improvement is seen.
"No one really knows it's really a function of the economy," said Brad Whitt, an analyst with SWS Securities in Dallas, who does not own Manugistics shares. "Corporate [information technology] spending has been very slow. I would not expect an uptick at this point."
Manugistics executives said they will lay off at least 130 workers. That, accompanied by decreases in spending, will save the company $5 million to $7 million per quarter. It said overall revenue for the quarter ending Nov. 30 will be flat, but that software revenue could increase.
"We believe that we have emerged as the clear leader in our market and are confident that our leadership position will continue as the economy improves," said Manugistics Chairman and Chief Executive Officer Greg Owen. "Nonetheless, we have decided to take additional steps to lower our expenses and return to adjusted operating profitability sooner."
Key to Manugistics' emergence from the economic downturn will be weaning customers away from bigger software vendors like SAP and Oracle, analysts said. These bigger firms are best known for enterprise resource planning (ERP) software, which integrates all of a company's operations onto one computer system. But, they have started to offer enterprise profit optimization (EPO) software, which helps manage a company's supply chain and maximize profits. Manugistics has long been one of the top providers of EPO software.
"One of the challenges for Manugistics is that ERP players are encroaching on their space," Mr. Whitt said.
Mr. Whitt said corporations may like the idea of getting ERP and EPO software bundled from one company. "At the end of the day, I'd want fewer vendors," he said.
But other analysts said the phenomenon of getting all corporate information technology software from one vendor may be a passing trend, brought on by economic conditions.
One positive for Manugistics is that competitors have lost domination of the software market. For instance, 12 Technologies Inc., seen as one of Manugistics' top competitors, reported second-quarter revenues of less than half of last year's.
"The playing field has been very much leveled," said Pat Coleman, an analyst with Soundview Technologies in Greenwich, Conn.

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