Manugistics No Longer For Sale; Instead, It Reorganizes

In a surprise move today, supply-chain-management vendor Manugistics Group Inc. announced the company is no longer for sale. Rumors have swirled for the past several weeks that Manugistics was about to be acquired by one of several vendors, including IBM, Oracle, and SAP. But now the company says it is no longer engaged in discussions with other vendors.

Instead, Manugistics says it plans to reduce expenses, change its management team, and concentrate on its core strengths as well as on emerging electronic-commerce opportunities. The company has a long way to go before it reclaims its reputation as a leader in the supply-chain market. Manugistics has posted three straight disappointing financial quarters. In its most recent quarter, the company reported a net loss of $10.4 million.

Over the course of a year, the company has seen its stock price plummet from a high of $66 to its current price of about $10. Its market cap has dropped from nearly $2 billion to about $300 million. "Our No. 1 objective is to return to profitability, which we believe we can achieve in the near-term by reorganizing the company to improve our execution, and streamlining the business to focus on target markets," says William Gibson, chairman and CEO of Manugistics.

As a first step, Gibson will step down as CEO but remain chairman. The company says it plans to recruit a new CEO. Manugistics will also create a new set of applications, called e-Chain, that will allow customers to do collaborative planning and forecasting over the Internet. And the company is reducing its workforce by approximately 30%, or 400 people. Manugistics says it expects to report a nonrecurring charge of about $60 million for the quarter ending Feb. 28 to cover costs related to the write-off of equipment and intangibles, closing of certain offices, and the workforce reduction.

Despite Manugistics' current woes, the supply-chain market as a whole is robust, growing about 50% annually, according to AMR Research. Bruce Richardson, an analyst with AMR, believes Manugistics caused its own problems with bad management decisions and poor execution on the sales and marketing side. "Manugistics is like a big 18-wheeler that has jack-knifed off the road," he says. "It will be very difficult for them to regain momentum."

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