FRAMINGHAM (07/21/2000) - Following this week's announcement by Baan Co. NV of disastrous restated financial results, analysts have all but started to write the ailing Dutch enterprise resource planning (ERP) software supplier's obituary.
Baan's misfortunes continued this week when its restated financial results for last year reduced sales from US$635 million to $619 million, compared with $736 million in sales for 1998. The restated revenue widened last year's loss to $309.6 million.
Baan officials failed to respond to repeated requests for comment, so it's unclear why the Barneveld, Netherlands-based company was compelled to restate its financial results.
The company said in a statement this week that it expects to post a loss of $85 million to $95 million for the second quarter, which ended June 30. Sales will be in the $70 million to $80 million range, down from $173 million for the same period a year ago, officials said.
"The company has been critically ill for some time," said Joshua Greenbaum, an analyst at Enterprise Applications Consulting in Berkeley, Calif. "The right people in the right place making the right decisions would have saved this company."
Lack of Leadership
Analysts attributed Baan's downfall to leadership problems, including mismanagement by founding brothers Jan and Paul Baan. Executives overstated earning projections, muddled through seven consecutive quarters of losses and failed to solve serious integration problems following the acquisition of several financial software vendors, including Coda Group PLC and Aurum Software Inc., analysts said.
There was initially some synergy, but these companies were never integrated technologically and culturally with Baan, said Ed Markowitz, an analyst at ChainNet Research AG in Cincinnati.
Analysts said Baan's only hope for survival is pinned on London-based electronics and engineering firm Invensys PLC, which in May offered to buy the company for $709 million. Invensys set a stipulation that 95 percent of Baan's shareholders must approve the deal and extended its offer until July 25 after falling far short of that target.
The acquisition offer passed a major hurdle this week when an additional group of shareholders approved the buyout, an Invensys spokesman said.
Mike May, CIO at Teknion Corp. in Toronto, said customer support isn't a concern - provided Invensys buys Baan. The office furniture maker uses Baan's Demand Planner and Execution software. "Invensys has good management with deep pockets" and will refocus on the existing customer base, May said.