Profit warning, CEO resignation hit Baan
Shares fall more than 30 percent after the company says it expects its fourth quarter losses to widen and chief executive Mary Coleman resigns.
Shares of Baan tumbled more than 32 percent in early trading
today after the enterprise software company said it expected fourth-quarter losses to widen, exacerbated by a reorganization to focus on the Internet business-to-business sector. The Dutch firm also said that chief executive Mary Coleman has resigned to pursue other technology-related interests. It named chairman Pierre Everaert as interim CEO.
Baan stock plunged 32.07 percent or 4.75 points shortly after the opening bell today, falling to 10.06. Shares of Baan have traded as high as 17.81 and as low as 6.87 during the past 52 weeks. They closed today at 10.12.
The outlook for the business-management software maker also was downgraded by HSBC Securities to a "sell" from a "hold."
Analysts said they were not convinced the company's move to enter the business-to-business market would help it overcome the perception that it is a laggard, especially since SAP, its German rival, is entrenched in the sector.
"This new strategy is being used to mask the bad profit news," NIB analyst Louis Hakkenberg told Reuters. "It does not look too good...to me it looks like a hidden profit warning."
As part of the reorganization, Baan will record write-downs of certain capitalized software, equipment and intangible assets not related to its core Internet strategy.
Baan said it will close 14 offices and reduce its workforce by about 4 percent. These write-downs and restructuring charges, along with increases in investments and other reserves and allowances, are expected to be about $200 million during the fourth quarter of 1999. The bulk of these expenses are non-cash charges.
Including this charge, the company expects a loss of up to $250 million for the fourth quarter on revenues of about $150 million.
Reuters contributed to this report.