Flat ERP sales bruise JD Edwards

JD Edwards has incurred its second successive loss for the quarter ended 31 July, reflecting the slowdown in ERP sales.

It reported turnover down to $232.1m, from $239.6m last year and net loss of $33.2m, compared with a profit last year of $18.1m - 23 per cent less than predicted.

Since last November, JD Edward's cash position has fallen $142.2m to $391.8m. In the last quarter alone, cash resources fell $125m, of which $80m was accounted for by the acquisition of supply chain vendor Numetrix.

A change in Wall Street rules on the way R&D is accounted, meant that instead of taking a full, one-time write-off of $80m, software development costs of $30.5m were capitalised in the last quarter, in addition to the acquired in-process R&D costs of $24m.

It also took an amortisation write-off of $3.2m related to acquired technologies.

Rick Allen, chief financial officer at JD Edwards, said the company is reining in operational costs as a proportion of sales revenue and that for the fourth quarter, he expected to see a "positive position, but marginal".

In Europe, Nigel Pullan, senior vice president for EMEA at JD Edwards, said: "Year-on-year, we expect the market to be flat. There's isn't a lot of business out there but I'm confident about how the sales pipeline is developing."

The company also announced it intends to buy back up to eight million shares, "to offset the effects of share issuances under JD Edwards option and employees stock plan".

Although the buyback timing will be determined by the directors, if completed now, it would cost JD Edwards about $144m.