Manugistics Beats 4Q Estimates



Manugistics beat fourth-quarter revenue projections, alleviating investor anxiety that a malaise had fallen over the enterprise software market.

On Monday, the supply-chain automation company reported $89.3 million in revenue for the quarter ended Feb. 28, up 105% from a year ago and beating First Call estimates of $81.3 million. Earnings per share were 6 cents. Analysts are relieved following disappointing results from Oracle, J.D. Edwards, and Tibco Software, which each missed their earnings targets this month, and Commerce One, who has signaled that its business is slowing. "It is great to see a bright spot in software," says equities analyst Brent Thill of Credit Suisse First Boston.

Manugistics signed 36 new deals during the quarter and says its average deal size grew slightly to $1.3 million. The company won several major automotive contracts, including deals with Daimler-Chrysler and Harley Davidson, indicating that even in an industry hit particularly hard by the economic slowdown, supply-chain projects remain high priority. Companies remain willing to invest in high-impact projects that promise to reduce inventory and speed product delivery, says Manugistics CEO Greg Owens. "Supply-chain management fares well through these cycles," Owens says. "No sector is recession resistant, but supply-chain management is as recession resilient as any I know."

The company finished the year at $268 million in revenue, up 76% from 1999. The company widened its losses, however, reporting a net loss for the year of $28.1 million, or 48 cents per share, compared to a net loss of $8.9 million, or 16 cents per share in 1999. The company remains conservative in its outlook for 2001, projecting 35% to 40% growth for the year, driven by new applications and product enhancements. This summer the company plans to release an enterprise profit optimization application, which it acquired from Talus Solutions last year, that is fully integrated with its supply-chain suite. The application helps companies maximize profits through variable pricing and availability for different customer segments.

Owens acknowledged on a teleconference Monday that its relationship with E-procurement company RightWorks has been called off as a result of RightWorks acquisition by rival i2 Technologies. Analysts say the time is ripe for an alliance between Manugistics and i2's cast-off partner Ariba. The companies already have something in common: Manugistics is cozy with Agile Software, the company Ariba is acquiring. "I would expect you will see a full-scale alliance between Manugistics and Ariba," Thill says. "They've already been pulled in at the field level a couple times."

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