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J.D. Edwards cuts workforce by 800

By John Cox and Eugene Grygo
Network World and IDG News Service, 05/23/00

Enterprise resource planning software provider J.D. Edwards Monday said it would cut its global work force by 800 and focus on reinventing itself as an e-business.

The layoffs, which will hit the company's operations in Germany and Japan, are an effort by J.D. Edwards to get its costs in line with its revenue, CEO C. Edward McVaney says.

"This is a very tough but very necessary decision," McVaney says. Those idled by the layoffs will get outplacement training. The goal is for J.D. Edwards to become "more nimble and responsive to market changes."

McVaney was re-appointed as president and CEO in early April, following the resignation of Doug Massingill. McVaney was CEO from the company's founding in 1977 until November 1998, and he remains chairman.

During the first six weeks of his return to J.D. Edwards, McVaney says it has become "very clear to me that our key to success is Internet e-business."

Even though the ERP software vendor has experienced a 20% jump in software license revenue during the first half of the current fiscal year, it is not enough to keep up with the firm's cost structures, McVaney says.

Earlier this month, J.D. Edwards reported preliminary financials for the second fiscal quarter, with revenue in the $225 million to $235 million range, about level with the results from a year ago. At that time, the company said it expected to record a net profit after gains from the sale of equity investments, but expected an operating loss of $20 million to $25 million. In a statement, the company said the loss was due to "lower than anticipated margins on license fee revenue, and investments in sales and marketing activities." Final quarterly numbers will be released May 24.

Further layoffs are not expected because the elimination of these positions has re-set cost structures to conform with revenue, which will pave the way for a return to profitability, J.D. Edwards officials say. The vendor also will be taking advantage of computer-based training alternatives for customers, cutting back on office space and other overhead expenses, officials say. The layoffs will not affect J. D. Edwards' customer support department, which might get a staff increase, officials say. J.D. Edwards also hopes to garner savings from using its e-procurement solutions.

Alliances with major players such as Siebel Systems and Ariba are going to stick, according to McVaney. These arrangements will fit in well with J.D. Edwards view that "e-business will be heterogeneous," McVaney says. "We want to allow customers to implement their ideas as rapidly as possible."

J.D. Edwards: www.jdedwards.com