i2 in the News

In the business world, green definitely is “in.” Whether driven by genuine concern for the planet, spiraling fuel costs, customer and consumer demands or merely the desire to jump on a great PR opportunity, corporations everywhere are beginning to think about their carbon footprint.

So far, few have made environmental issues a strategic imperative or key decision variable, “but that is going to rapidly change,” says Mike Kilgore, president of Chainalytics, Atlanta. He predicts that over the next 12 to 24 months, widespread participation in and publicity around initiatives like the Carbon Disclosure Project (see sidebar) will cause companies to aggressively pursue carbon reduction as not only enterprise strategy, but as policy that will drill down into everyday decision making.

As that happens, the supply chain will be in the cross hairs. Transportation involved in product distribution represents a significant energy expenditure. And if the supply chain is defined as encompassing manufacturing and procurement as well as logistics—as it is at many companies—it could well be the largest generator of greenhouse gases (GHG).

“There are different ways of looking at it, but in every instance, supply chain networks play a fundamental role in corporate carbon footprints; there is just no question about that,” says Dave Miller, chief operating officer at Con-way Freight, Ann Arbor, Mich. The impact is both significant and unavoidable, he adds. “If freight is moving on a vehicle, regardless of mode, it is using carbon-based energy. Transportation is carbon-based and will be carbon-based into the foreseeable future.”

Stock Pops on NASDAQ after Q4 Results Handily Top Expectations

The News: Supply Chain software provider i2 saw its stock jump 17% last week (see this week’s supply chain and logistics stock report) after it once again reported strong financial results, beating analyst expectations and continuing the company’s return to financial health.

The Impact: i2 has a huge customer base, including many of the world’s largest companies, and has a dominant position for supply chain software solutions in verticals like high tech, as well as a strong position in many other industries. A few years ago, these current and prospective customers were understandably concerned about the company’s financial position, after the market saw a big drop in software spending coming out of the internet bubble, and questionable accounting practices uncovered at i2 led to several restatements of earnings, brief de-listing from the NASDAQ exchange, and a huge drop in its once soaring stock price.

Under new CEO Mike McGrath, who move from the i2 board to the CEO spot in 2005, the company has made steady and impressive improvement in its financial results, stemming both from a more disciplined approach to financial management as well as what appears to be a strong overall market for supply chain software.

The Story: In Q4, i2 earned $14.3 million, or 54 cents a share, on revenue of $79.6 million. With analysts expecting earnings of just 27 cents a share and revenue of $72.2 million, i2 stock jumped 17%.  A year earlier, the company posted adjusted Q4 earnings of $11 million, or 43 cents a share, on revenue of $96.6 million.

The company also projected solid results for 2007.

For all of 2006, i2 had revenue of just shy of $300 million, including about $50 million in software revenues, and profits of $21.3 million.

Over the past 12 months, i2’s stock has risen by more than 60%.

The full year 2006 results in terms of revenue and profit were actually down from the prior year, but with the changes in accounting and some divestitures, it is hard to make exact comparisons. The company had a slight negative cash flow from operations in 2005, while it had positive cash flow of $14 million in 2006.

By way of contrast, i2 had a large loss as recently as 2004, and most financial analysts stopped following the company during its operating and regulatory troubles. With the continuous improvement in operating results and stock market performance, it is likely many analysts will renew coverage of i2.

Supply Chain Digest’s discussions with software industry analysts indicate i2’s financial condition is no longer a significant issue for most companies considering the company’s solutions, a significant change from two years ago.


View the Supply Chain Digest full article