i2 confident of clinching new deals despite job cut

Siobhan Kennedy

NEW YORK: i2 Technologies Inc. is seeing its pipeline of new deals continue

to grow, executives said on Thursday, defending the company against investor

fears that recent sales force cuts had dampened future growth prospects.

Speaking on a conference call hosted by Morgan Stanley analyst Chuck

Phillips, i2 officials said that despite cutting 10 per cent of its sales force

last week, the company's pipeline of new deals had gone up. "The deal

volume in the pipeline has increased," i2's chief executive Greg Brady

said, referring to the number of deals the company has in the works but not yet

clinched.

Philips, Morgan Stanley's influential software analyst, held the conference

call in order to allay investor fears about i2. The company, which makes

software that lets companies share inventory and purchasing data with suppliers

over the Internet, has seen its stock lose 45 per cent of its value since the

beginning of July.

Shares of i2, which have traded as high as $99.43 in the past 52 weeks,

closed down 2 per cent on Thursday, at $10.27. Brady said the job cuts - which

came after a 14 per cent staff reduction in the first quarter - only involved

unproductive members of the sales team who hadn't made any sales and had no

customer prospects in the pipeline.

"We did a very systematic reduction and we looked only at those (sales)

reps who had sold nothing and also did not have a pipeline of a certain size and

we let those reps go," Brady said. Brady said that the remaining sales

force were responsible for over 90 per cent of the company's revenues in the

past few quarters.

"So what we expect to happen is that our actual win rate will go up as

well as our pipeline per rep will obviously go up," he said. Brady's

comments come at the end of a particularly hard run for i2. On July 18, the firm

posted a second quarter net loss, including charges of $861 million or $2.08 a

share, compared with a loss of $281 million or 83 cents a share, in the year ago

period.

On a pro forma basis, excluding the charges, the company still recorded

losses of $66 million, or 16 cents a share although the loss was in line with

drastically lowered Wall Street expectations. That compared with a profit of $20

million, or 5 cents a share, in the same period a year ago.

Meanwhile, i2's revenue fell to $241 million from $243 million last year. A

week later, i2 said its head of worldwide sales, Reagan Lancaster, had resigned.

i2's biggest problem is its dependency on big, multimillion-dollar deals to

meet its financial targets, analysts said. It has also suffered from the

concentration of its customer base among hard-hit high-tech firms where rivals

have targeted a wider range of industries.

During the call, Brady reiterated i2's commitment to train its sales force

away from the big deal culture and make them go after a bigger number of smaller

deals instead. "Clearly that (big deal) strategy in a down economy has

caused some hiccups," Brady said. i2's stock, once one of the highfliers of

the Internet economy, has tumbled since March 2000, along with much of the B2B

sector.

Since the beginning of this year, i2 has lost 76 per cent of its value and

has under performed the S&P500 software index by 74 per cent. The software

index which make up 18 companies has gained 10 per cent so far this year.

(C) Reuters Limited 2001.