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Analyst reports: Executive loss no big loss for i2

Despite jitters on Wall Street, analysts react calmly after a senior executive resigns at i2 Technologies without an immediate replacement.

Despite jitters on Wall Street, analysts reacted calmly Monday after a senior executive resigned at i2 Technologies without an immediate replacement.

Late Wednesday afternoon, after the close of regular stock trading and before the Thanksgiving holiday, i2 chief operating officer Bob Evans quietly announced his resignation.

The 47-year-old COO left to pursue "personal interests," an i2 representative said. The Dallas-based company, which specializes in e-commerce software and consulting, has not yet announced his replacement.

i2 stock plunged 11 percent in after-hours trading on Wednesday before rebounding slightly on Friday during the half-day regular trading session. At midday Monday, the shares were flat at about $113.

i2 stock, which has traded in a 52-week range between $30.68 and $223.50, is down 32 percent for the month.

Before his stint at i2, Evans was president and chief operating officer of Mountain View, Calif.-based Aspect Development, which i2 acquired for about $5.62 billion in stock. After the acquisition was announced in March, Evans was named as i2's chief operating officer and oversaw the integration and reorganization of the two companies.

As part of the integration, i2 reorganized into five business units and one global sales organization. The business units consist of design and sourcing applications; planning and fulfillment; the TradeMatrix e-commerce marketplace platform; content management for business-to-business and business-to-consumer e-commerce products; and consulting.

i2's flagship product is TradeMatrix software for B2B e-commerce management. The company?s clients include IBM, Toyota Motor and Volkswagen.

Despite the initial stock dive after Evans announced his departure, analysts on Monday were nonchalant regarding the COO's resignation and reiterated bullish stances on the stock. They said Evans was not a high-profile executive, nor was he particularly well known to Wall Street insiders.

"We viewed Evans as part of the i2/Aspect transition team and would not view this departure as indicative of any fundamental changes to i2's prospects," Merrill Lynch analyst C. Shilakes wrote in a research report issued Friday. "We believe the existing i2 executive team is extremely capable and have no concerns that Evans' role can be assumed by existing management members."

Merrill Lynch reiterated its "accumulate/buy" rating on Friday, and urged investors to scoop up shares if they slide further and the overall tech sector begins to perk up.

"Given any overreaction in the shares, we would add to positions as the tech tape firms," Shilakes wrote.

Analysts for Sutro & Company and Robinson-Humphrey also reiterated "buy" ratings on Monday.

But investors should continue to be wary of i2. A Goldman Sachs research note from Goldman Sachs said that the stock has an "above average" risk factor.

Goldman analysts Thomas Berquist, Rick Sherlund and Lilly Bahramipour said that the risk comes in part from "fierce" competition from Commerce One and other B2B players, as well as from investors who have set i2's quarterly growth targets extremely high.

"Investors likely will continue to be apprehensive at the end of each quarter as large deals are waiting to close," they wrote in a research note drafted Friday. "There is above-average quarterly execution risk at i2, but there also is considerable upside potential as the company's business becomes B2B e-commerce-centric."