J.D. Edwards cuts workers, but results improving

Business applications vendor J.D. Edwards & Co. yesterday disclosed that 8 percent of its employees have been laid off as part of a self-styled "revitalization" effort following several quarters of losses and declining sales.

But the Denver-based software developer also said earnings in its fiscal second quarter, ended April 30, should be higher than expected, despite a continued drop-off in revenue. Results from "normalized operations" are likely to be "significantly better" than the US$1.7 million operating profit reported for last year's second quarter, J.D. Edwards said.

The company added that it expects up to $215 million in second-quarter revenue, with software license fees amounting to about $63 million. Both those figures would be off from the respective year-earlier totals of $231 million and $81.7 million, but CEO Ed McVaney said in a statement that J.D. Edwards has made "considerable progress" in its recovery plan.

The maker of enterprise resource planning and supply chain management software pared its employee roster by 400 workers as part of a planned $75 million cost-cutting program. Other steps in the works include a restructuring of the company's sales and service operations, a management cutback and a rebuilding of its marketing department.

The changes follow a February management shake-up in which J.D. Edwards named a new chief operating officer and a new head of marketing. The layoffs are the second round of workforce cuts in the past 12 months at the company, which let 800 people go last May.

Last year's layoffs came one month after McVaney, one of J.D. Edwards' co-founders, took back the CEO job that he had given up in late 1998. The company, which couldn't be reached for additional comment on yesterday's announcement, has reported operating losses in three of its last four fiscal quarters.

J.D. Edwards late last year announced a plan to provide a Web-based collaborative commerce framework built around its OneWorld application suite, a move that has drawn approval from software analysts and some users. But Tom Cook, an analyst at AMR Research Inc. in Boston, said in a March report that the ongoing changes at J.D. Edwards are "necessary and on target."

The internal changes should help "promote accountability and improve resource utilization" in the company's sales and professional services units, Cook said in the report. He added, though, that J.D. Edwards may be hampered by a lack of homegrown online procurement and customer relationship management software. And the company still needs to "convince [users] of its long-term vision and viability," Cook said.