CAD/CAM software house SofTech Inc has parted company with 25% of its US workforce this month after a dismal second quarter in which the Grand Rapids, Michigan company plunged into the red with a $2.8m loss against a $322,000 profit last time. A litany of excuses was produced for the poor performance – which inevitably raises the thought of what the board was doing to allow so many things to go wrong so quickly. The most fatuous explanation is that orders totaling $1.5m were received too late to be recognized as revenue and remained in backlog. Well, any poor quarter’s figures could generally be cured if revenues from the next three months were added. Then the sales force failed to bring in the expected additional revenue from a new product line and R&D spending was higher than planned. Add to that the admission that there was slower than required financial controls to reduce SG&A expenditures and you get the picture of an organization with ineffective financial controls in place that has become adept at missing targets. The only consolation would appear to be buoyant revenues up 81.9% in the first six months. But in May this year, SofTech bought another CAD/CAM software house, Adra Systems, which had $16m revenues in 1997 – bigger than the $14.7m SofTech achieved in the same period. So just standing still, the enlarged Softech should be doubling quarterly revenue – though growth for the latest three months is down to 59.7%. Inevitably, SofTech put a spin on its current misfortunes by saying it has emerged as a leaner more efficient organization. Alas, it is a fair bet that the 25% of employees facing Christmas without a job do not include the ones who really deserve to be out of the door.
