i2 Technologies (Nasdaq: ITWO) rose US$1.81 to $16.31 in morning trading Monday, even after lowering its outlook for first-quarter results and announcing a plan to reduce costs.
The Dallas, Texas-based provider of business-to-business (B2B) software and services said that it expects earnings before amortization, writeoffs and other items of about 2 cents per share, down from 4 cents a year earlier and below analysts’ consensus forecast of 5 cents.
Revenue, however, will likely total $355 million, up from $186 million a year earlier, as license revenue rises to $210 million from $114 million, the company said.
“Although we continue to see healthy demand for our solutions, some of our customers are delaying purchasing decisions due to uncertainties about the economy,” said chairman and chief executive officer Sanjiv Sidhu.
“Our previous guidance for 2001 was based on the extremely high demand we saw last year,” chief financial officer Bill Beecher added.
Beecher said that because of “the current economic environment and the associated decrease in revenue visibility,” i2 plans to take steps to cut costs by 5 to 10 percent.
“These cost-containment measures may involve reductions of approximately 10 percent of i2’s employees,” and will likely result in a restructuring charge in the second quarter, Beecher said.
“Despite challenging economic conditions, i2’s revenues grew significantly over the same quarter last year,” said Sidhu. “A large part of our growth in 2000 resulted from companies adopting our solutions to increase their competitive advantage and establish marketplaces based on our technology.
“We still believe opportunities exist in the under-penetrated markets that we serve,” Sidhu said. “This quarter, a fair number of customers chose i2 to improve supply chain and other efficiencies despite facing an economic slowdown.”