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Services help cut Baan's loss

The Dutch business software firm reports a smaller than expected first quarter loss, as strong services revenues help offset a drop in license sales.

Dutch business software firm Baan today reported a smaller than expected first quarter loss, as strong services revenues helped offset a drop in license sales.

Baan, which makes enterprise resource planning (ERP) software for managing corporate manufacturing, human resources, and financials, reported a net loss of $19 million, or 9 cents per share, compared to a $2 million, or 1 cent per share profit for the quarter a year earlier. Results beat analysts' expectations of a loss of 11 cents per share, according to First Call.

The news sent shares of Baan's stock up 11.43 percent this morning, to $9.75 a share.

Though the company said it had reached its cost-cutting targets for the quarter, the firm's executives told Reuters they are working with a number of international banks to increase the company's line of credit to $75 million.

Like other ERP vendors, including German software giant SAP and PeopleSoft, Baan's license revenue growth, a key measure of the company's overall health, has slipped. Analysts blame the market slowdown on a number of factors, including partial saturation of the ERP market, ERP project delays caused by Year 2000 bug preparation projects, and economic problems in Asia.

Baan's license revenue for the quarter decreased about 30 percent from $93 million in the same period a year ago to $65 million, while the company's maintenance and services revenue jumped 28 percent to $111 million.

Meanwhile, the company said today that the vast majority of its customers have stayed with the firm in the first quarter, despite recent financial problems that caused the company to cancel its annual user show, BaanWorld, and lay off about 20 percent of its global workforce.

Baan has also struggled with implementing an indirect sales model and has had a long-standing problem integrating applications after its many acquisitions.

Nonetheless, "About 97 percent of our customers have stayed with us," a Baan spokesman told Reuters today. In addition, the company reported winning a large contract with Royal KPN, a Dutch telephone company.