GEAC Posts Loss, Puts Acquisition Moves on Hold

Struggling software vendor Geac Computer Corp. Friday reported a fiscal second-quarter loss of US$37.2 million due to a one-two punch of weak enterprise application sales and the fact that users are taking longer to make decisions about buying its product.

The Toronto-based maker of enterprise resource planning software also said it's holding off on major acquisition moves while it "considers various strategic and financial options." The alternatives under consideration include a possible sale of the company as a whole or in pieces, a Geac spokesman said, although he added that a sell-off isn't definite at this point.

Geac hired investment banking firm Lazard Freres & Co. as a financial adviser late last summer, shortly after reporting a $29.1 million operating loss for its first fiscal quarter ended July 31. The company followed that move by announcing a 12% workforce cut meant to prime itself for a potential sale.

The company has also made a series of management changes following the resignation of former CEO Douglas Bergeron in October. First, the company named Chairman William Nelson as interim CEO and made John Caldwell its interim president and chief operating officer. Then, Geac last month said Caldwell would take over as temporary CEO after Nelson decided to step down for personal reasons.

For its second fiscal quarter ended Oct. 31, Geac reported revenue of $133.4 million, down 14% from $155.9 million in the same three-month period a year ago. For the first half of the company's fiscal year as a whole, revenue dropped from last year's level of $282.7 million to $273.7 million.

"Our revenue for the first six months [of the fiscal year] reflects lower activity in the post-Y2K marketplace," Caldwell said in a statement. But gross margins did improve from the first to the second quarter after Geac "sized our businesses to improve operating profits and cash flow," Caldwell added. "With a more competitive cost position, we anticipate that our financial performance will improve through the balance of the fiscal year."

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