Baan NV's chances of surviving as an independent company, which already were in doubt, are looking even more bleak on the heels of an announcement late Monday of restated financial results that reduced Baan's 1999 revenue and widened its loss for last year to $US309.6 million.
In the audited 1999 financial statements that the company released Monday, Netherlands-based Baan said the "operating environment confronting the company raises significant uncertainty about [its] ability to continue as a going concern."
The warning came several days after London-based Invensys PLC extended a $709 million offer to buy Baan after getting commitments for far fewer than the number of shares it had set as a condition for going through with the acquisition. The Invensys offer, originally scheduled to expire last Thursday, was continued until July 25 in an effort to save the deal.
Baan officials couldn't be reached for comment, but Pierre Everaert, the company's interim CEO, said in a statement that the Invensys offer remains "the best way to secure Baan's future" in light of its financial problems.
"I think the 1999 [financial statements] confirm that additional financing would not solve the issue," Everaert said. "We need a strong strategic partner to take the viability issue off the table and restore customer confidence if we are to return to a normal business cycle."
David Dobrin, an analyst at Benchmarking Partners in Massachusetts., said Monday's news means more disappointment for Baan customers who have stuck by the vendor through seven straight quarters of losses.
But Dobrin added that he's not surprised by Baan's continued woes. For the past year, he said, the company has "lost credibility, attention and belief" because of its financial struggles and internal dissension that resulted in a series of senior management changes.
Following an examination of the company's books by its auditors, last year's revenue declined from the $635 million that Baan reported in February to $619 million, compared with revenue of $736 million in 1998. Software licence sales totalled just $193 million last year, down from $336 million in 1998.
The restating of its results also left Baan with a negative shareholder equity position that the company said will likely result in its stock being placed under "special listing conditions" by the Amsterdam Stock Exchange.
To survive without the buyout by Invensys, Baan said it would have to implement "a fundamental restructuring" that would reduce its operations by at least half. Securing financing to pay for that "will likely prove challenging", Baan added.