Tech glitch hurts Agilent's sales
A customer service system that the electronics and testing equipment maker recently adopted had problems that cost it about $105 million in revenue, the company says.
Problems with the Oracle software, which include applications designed to help businesses book orders and record revenues, caused the company to lose about $105 million in revenue and $70 million in operating profits, Agilent said Monday upon posting $228 million loss, or 49 cents a share, for the quarter ended July 31.
The Palo Alto, Calif.-based company, which makes testing equipment for semiconductor manufacturing, reported that revenue dropped 24 percent to $1.39 billion from $1.82 billion a year earlier. Analysts were expecting revenue of $1.55 billion.
The glitches occurred because the company had trouble transferring customer account and financial data from a number of other order booking systems to the new Oracle system, said Agilent spokeswoman Michele Drake. The Oracle system had been slow to respond as employees input orders, but that the problems have since been fixed, Drake said.
Agilent does not blame Oracle for the problems, Drake said.
"We feel that regardless of who we had as a vendor, we would have had these problems because the switch over from our legacy systems was so complex," Drake said.
Agilent has 2,200 different computer systems that run various parts of its operations, and undertook the Oracle software project last year with the goal of reducing the number of systems it has to support, Drake added.
Many Oracle customers encountered glitches when the software giant released a new version of its business applications last year. The company said it has fixed most of those problems, which it said were caused by rushing to sell the first version of its applications that run on the Internet before working out all the bugs.
"At Oracle, we are fully committed to all of our customers for the long-haul and support them in any way necessary," Oracle said in a statement. "We have a strong relationship with Agilent, and both companies believe the implementation is stable and fully expect that it will meet the customer's requirements going forward."
Many companies have struggled to install business applications that control complex functions of their business such as manufacturing, order booking and accounting. In some cases, the problems have led to finger pointing and lawsuits among software companies and their customers.
Shoemaker Nike similarly blamed a glitch in the software it bought from i2 Technologies for a shortfall in earnings last year. Last week, Lawson Software settled a breach-of-contract lawsuit with TeamStaff.