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J.D. Edwards reports lower earnings

J.D. Edwards reported lower-than-expected first-quarter earnings due to an overall slowdown in business software sales.

Kim Girard
Kim Girard has written about business and technology for more than a decade, as an editor at CNET News.com, senior writer at Business 2.0 magazine and online writer at Red Herring. As a freelancer, she's written for publications including Fast Company, CIO and Berkeley's Haas School of Business. She also assisted Business Week's Peter Burrows with his 2003 book Backfire, which covered the travails of controversial Hewlett-Packard CEO Carly Fiorina. An avid cook, she's blogged about the joy of cheap wine and thinks about food most days in ways some find obsessive.
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Kim Girard
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J.D. Edwards reported first-quarter earnings in line with the business software company's earlier warning of lower-than-expected profits.

The Denver-based business firm, which makes enterprise resource planning (ERP) software to manage accounting, human resources, and manufacturing, said revenues increased 25 percent to $222.9 million for the quarter-ended January 31, 1999, compared to $178.3 million one year ago.

The company posted profits of $4.3 million, or 4 cents per share, compared to $6.4 million, or 6 cents a share, a year ago.

As previously reported, the company issued a warning of lower than expected earnings on February 11. Before the warning was issued, Wall Street analysts were expecting earnings of 9 cents per share, according to a First Call consensus. J.D. Edwards is the latest vendor to be hit by an industry-wide slowdown in ERP software sales.

The company's license fee revenues grew slightly, to $69.6 million from $68 million in the first quarter of 1998, while the firm's services revenues fared better--increasing 39 percent to $153.3 million.

Shares of the company's stock were trading at $14.93 a share this morning, tumbling this month from a 52-week high of $49.50.

Company executives said a host of internal and external factors have hurt profitability, including the crisis in Asia and slower-than-expected license fee growth as corporations focus on their Year 2000 systems fixes.

The firm is also adjusting to a sales force restructuring and a new vertical business model it shifted to last November when the company was split into three divisions: industrial, consumer products and goods, and general services, marketing, and development.

To build up offerings in the industrial division, J.D. Edwards this month made its first acquisition since going public in 1997, buying Premisys in a $12 million deal. Premisys makes engineering design software companies use for "made-to-order" manufacturing.