Geac plans more cutbacks after search for buyer fails

Struggling business applications vendor Geac Computer disclosed late yesterday that it hasn't been able to find a buyer and is now putting together new cost-cutting plans that will include "a substantial reduction" of its workforce.

In a conference call broadcast today on the company's Web site, John Caldwell, Geac's president and CEO, said no formal acquisition offers were submitted during an "extensive" search process that began late last summer. Caldwell blamed the lack of interest on falling stock values for software vendors in general and "a tougher market" for getting acquisition-related financing.

Caldwell, who joined Geac last October and was named its interim CEO a month later, said the company plans to implement a series of cost-cutting actions within the next few weeks. Geac also will focus its resources on its existing user base and a smaller number of business units that "can demonstrate positive earnings and revenue growth," he added.

"We just have to get more cost out of this place to improve our profitability," Caldwell said. He declined to comment on how many workers will be let go in the upcoming layoffs, saying only that it will be "a significant number." The cutbacks and other restructuring moves are expected to be completed by the time Geac's fiscal year ends next month.

This will be the second round of layoffs at Geac, which currently has about 4,100 employees after an earlier 12 percent workforce reduction that was carried out last fall. Other moves being considered as part of the new restructuring program include possible office closings and reductions in administrative expenses, Caldwell said.

Earlier this month, Geac reported a net loss of US$141.7 million from continuing operations for its fiscal third quarter ended Jan. 31, on revenue of $139.1 million. That was the third straight quarter in which it lost money, although the third-quarter loss was just $2.2 million before taxes and one-time charges.

The goal of the planned cutbacks is to make sure that all of Geac's business units are profitable during the next fiscal year, Caldwell said. However, he noted that the third quarter is traditionally Geac's strongest three-month period and said the company is still "in a turnaround situation."

The uncertainty over whether the company would be sold has made it "very difficult" for users to finalize buying decisions, Caldwell acknowledged. Yesterday's announcement is meant to end that uncertainty, he said, adding that he hopes the upcoming cutbacks can be made "without impacting on our ability to serve our customers."

However, Geac also said that it will consider the possible sell-off of some businesses. Caldwell said the company is looking at divesting some of its vertical industry units, although he wouldn't comment more specifically. Talks are under way with "a number of potential buyers as we speak," he said.

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