The restructuring was expected. At the time of his appointment just over a month ago McGrath said he planned to resize the business to bring costs into line with sales and anticipated making an announcement within 30 to 45 days.
Details are sketchy at the moment, but the intention is to drive operating expenses down to below $70m from the Q4 2004 level of $85m by reducing the global workforce by up to 15% and making additional program and operating expense reductions in most organizations and regions. The company did not outline where the cuts would be made but said further details would be released later this month.
McGrath said that the resizing plan was unlike the company’s previous cost reduction efforts because it was focused on reducing i2’s organizational structure and overhead in order to improve efficiency but did not provide any examples of how this may play out.
In a statement he said: It is my goal to make i2 one of the most productive software and solutions companies in the world, and this is the first step. Our next step will be to seek significant improvements in some of i2’s core business processes to enable greater productivity with a lower cost structure.
The last round of restructuring was announced a year ago when the plan was to reduce quarterly operating expenses by 10% during Q2 2004 compared to Q2 2003 through a reduction in workforce, program and other areas of expense. The cuts went across the board and hit all organizations and regions but the company continued to invest in sales initiatives and other customer-facing activities in a bid to help stabilize revenue in parallel with the restructuring.
For the fourth quarter, ending December 2004, i2 posted a loss of $2m on revenue of $84m. This compares to $17m profit in the preceding quarter on revenue of $111m but a loss of $49m on revenue of $98m for the year ago period.
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