J.D. Edwards Incurs Further Losses In Third Quarter

Event Summary

J.D. Edwards shifted deeper into the "lagging ERP vendor" category last week, as falling licensing revenue led to a drop in overall revenue and net losses in the company's third quarter, ended July 31. For the period, J.D. Edwards reported revenue of $232 million, $8 million down from last year's third-quarter revenue of $240 million. While licensing revenue fell quarter over quarter from $98 million last year to $75 million this year, the company was saved from total disaster by an 11% increase in services revenue to $157 million, compared with $141 million in third-quarter 1998. Without that, J.D. Edwards' picture would have been very bleak indeed. The net loss after acquisition write-offs was $33.2 million compared with a profit last year of $18.1 million. J.D. Edwards has lost a significant amount of its cash strength too. Since last November, its cash position has dwindled $142.2 million to $391.8 million. In the last quarter alone, cash resources fell by a whopping $125 million, of which $80 million is accounted for by the acquisition of supply chain vendor Numetrix.

Market Impact

Consequently, this updates Fig. 2 in TEC's note on J.D. Edwards & Co. ("J.D. Edwards - Creating OneWorld of Mid-Sized ERP Users" August, 1999) as can be seen in Fig. 1 below. However, this does not substantially change our position on the vendor as outlined in the note. More aggressive marketing and achieving OneWorld stability remain the main critical success factors for J.D. Edwards recovery, particularly within the Tier 2 ERP market.

Fig. 1

User Recommendations

We remain firm on the recommendations that we already outlined in our J.D. Edwards note:

  • We recommend including J.D. Edwards in a long list of an enterprise application selection to mid-market and low end tier 1 companies ($100M-$2B in revenue), especially within automotive, consumer packaged goods, electronics, and manufacturing & distribution industries.

  • J.D. Edwards should be on the short list in any selection within the ERP mid-market where manufacturing, logistics and financial modules are the main pillars of an enterprise application.

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