i2 finishes tough year on upbeat note

With $120M in 4Q02 revenue, i2 Technologies was able to show better-than-expected results as a way to end a difficult year.

Still the numbers for 2002 reflect the difficulties technology providers have been facing for the last two years. With FY02 revenue at $523M, i2 reports a 48% decrease from FY01. The company reported Q4 new license revenue of $37M, down 49% from 4Q01. With Q4 operating expenses of $128M, including $23M in restructuring charges, i2 reported a loss for the quarter. i2 also reported that it has commenced a re-audit of its 2000-2001 financials and that it will be moving to the NASDAQ Small Cap market.

"Amid all of this, rumors are flying about the potential implications of the re-audit, privatization and a possible acquisition by Infosys," comments . John Bermudez of AMR Research today in the technology think tank’s newsletter.

i2 executives stressed that they believe they have expenses under control and in line with revenue expectations. The company has also shifted 60% of its development to India, refined its product focus, and restructured its sales organization.

"With $475M in cash on the books, i2 can weather a few more negative cash flow quarters, but needs to turn things around this year," Bermudez says. "More importantly, i2 realizes that it cannot regain its former glory through expense control. So the company is working diligently to improve customer satisfaction. It is tracking the projects in the installed base closer than ever and reported 56 projects going live during Q4. For the year, i2 should have more than 300 new projects in production, or better than one every business day. "

On the question of i2’s survival Bermudez says i2 remains a good bet to survive its current difficulties even though it may be a long time before i2 passes $1B in sales again as it did in 2000.

"The company’s products contain huge amounts of intellectual property that competitors cannot easily replicate," he says. "For current i2 customers and prospects, this valuable intellectual property means that a potential acquirer is never far away should the company need a financial rescue. As supply chains worldwide are a long way from having seamless planning and execution, huge market potential still exists. Ultimately, however, i2’s survival is dependent on convincing the marketplace that its products are better able to address these supply chain issues than those of the Enterprise Resource Planning (ERP) vendors. . My bet is on i2."