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J.D. Edwards lays off 800 in restructuring

The business software maker lets go 13 percent of its work force as part of an effort to refocus the company's strategy and rein in costs.

Business software maker J.D. Edwards let go 800 employees today as part of an effort to refocus the company's strategy and rein in costs, the company announced.

"In some areas of our business, we simply had fat," said chief executive C. Edward McVaney. "We had to adjust out programs that were ill-conceived."

The Denver-based company, a leader in the business software industry, said it would also close some of its training centers and focus more on providing high-end e-business software and consulting.

The layoffs, which amount to 13 percent of its work force, come one month after an executive shakeup. Last month, McVaney, who founded the company, returned as president and CEO after Doug Massingill resigned.

McVaney said 242 of the layoffs are in the company's Denver headquarters, and about 300 will be overseas. The company did not specify where the remainder of the layoffs would be.

McVaney specifically noted the company's offices in Germany and Japan as targets for layoffs, saying that the expenses from the company's operations in those countries had outpaced its revenues.

J.D. Edwards is due to report its second-quarter earnings on Wednesday. The company declined to disclose the charge it will take for the layoffs, saying only that it will appear on its third-quarter report. The company's third quarter ends in July.

J.D. Edwards has been struggling to move away from its roots as an enterprise resource planning (ERP) software provider. Like its competitors such as Oracle, SAP, PeopleSoft and Baan, the company has been trying to shift its focus away from back-end ERP software--applications that automate a company's financials, human resources and manufacturing needs--toward Web-based front office applications.

The layoffs "needed to be done" said George Gilbert, who covers J.D. Edwards for Credit Suisse First Boston. J.D. Edwards was simply

Gartner analysts Yvonne Genovese and Chad Eschinger say that despite declining sales, J.D. Edwards' 800 layoffs do not mean that the company's focus on developing ERP or its other core products will weaken.

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losing too much money, he said.

Earlier this month, the company said it expected its second-quarter revenues to be flat and said it expected an operating loss of $20 million to $25 million.

Still, Gilbert called the layoffs "pretty amazing," adding that they could have a negative effect on the company.

"Layoffs can be pretty traumatic for customers," Gilbert said. "It makes them question the viability of a vendor long-term."

Like J.D. Edwards, other ERP companies have been plagued by management turmoil, plunging profits and tumbling stock prices. Holland-based Baan, for instance, announced its seventh consecutive quarterly loss last month, which was followed this month by the departure of one of its board members.

Even giant SAP has seen its profits drop 45 percent in its most recent quarter. And several of the German company's key executives, including the chief executive and chief financial officer of its SAP America division, have recently left.