Ilog SA warned of disappointing third-quarter results yesterday, blaming Y2K spending deferrals and the slippage of certain major deals for the shortfall in revenues. The French software components company said it expects revenues for the quarter ending March 31 to be between $14m and $16m, compared with $14.9m for the same time last year. Loss per share for the quarter is expected to be between $0.05 and $0.20, compared to positive earnings of $0.01 for the third quarter of 1998. Analysts surveyed by First Call had been looking for a profit of $0.07 in the quarter.
In addition to the aforementioned problems, Ilog blamed its ongoing transition to deriving more of its revenues as royalties from independent software vendors for the troubled quarter. Following the news, the company’s shares plunged nearly 33% on Nasdaq, shedding $2.50 to close at $5.125. Ilog’s market capitalization has been eroding steadily for the past 12 months and, at $71.6m, now represents less than one-third of its year- ago value. The company is due to report its third quarter results on April 22.
President and CEO Pierre Haren, nevertheless put a brave face on things and maintained that the company’s business fundamentals [were] sound and said he expects a recovery in fortunes once corporations increase their spending on new strategic applications, especially in supply chain management.
The enterprise software market has seen an overall slow-down, with many of the larger players such as SAP AG and PeopleSoft International Inc beginning to compete for the mid-range market now that the high-end is saturated. Ilog, a specialist component provider, could become an attractive target for acquisition if its shares continue to fall in value. SAP AG already licenses Ilog technology. A spokesperson for the company said that no large ERP vendor had ever expressed an interest in acquiring Ilog, but declined to comment on the possibility of that changing.
