Troubled enterprise resource planning software and services supplier, System Software Associates Inc has posted its seventh consecutive loss-making quarter, announcing a pro forma third quarter operating loss of $6.7m on revenue down 32% on a year ago at $73.1m. Excluding $22.8m restructuring charges incurred by the Chicago-based company’s slashing of up to 440 jobs, 20% of the workforce, in June, the loss per share for the three months to July 31 was $0.20: worse than analysts’ expectations of a $0.13 per share loss.
The earnings per share figure does not take account of SSA’s one for four reverse stock split approved by stockholders on August 17. Reverse stock splits by which firms decrease the number of publicly-owned or outstanding shares and proportionately increase the price are a common ploy to disguise a falling share price. In SSA’s case the action will lift the firm’s stock price safely clear of the $1 threshold below which it would face de-listing from Nasdaq.
SSA’s stock price stood at $1.66, during trading on Friday down from a 12-month high nudging $8 last December when it was buoyed by the release of the latest version of the firm’s flagship BPCS ERP software system in November.
Software license fee revenue plummeted 57% on the year-ago to $21.8m itself 23% down on like revenue for this year’s second quarter of $28.3m. The company has blamed weak customer demand on slackness in the overall ERP market, but it reckons the slump is only temporary.
A minor silver lining was services revenue, derived from maintenance and upgrades, which was up 25 % on the previous quarter at $73.1m, but this was 31.6% down on 1998 figures. The company has been taking services business back in house from sub contractors to tap extra revenue.
SSA has said it hopes to return to the black in fiscal 2000 after disappointing last year’s expectations that it would return to profit this year. It is in the throes of a realignment, which includes job cuts, and a re-jigged sales and marketing strategy, under chairman Bill Stuek’s drive to focus on six core vertical markets and thrust the 18-year old company further into services.
