Scottsdale-based JDA Software Group announced Wednesday it will shave its work force by 13 percent, or 167 jobs, and reduce office space in an effort to consolidate product lines and decrease costs by as much as $17 million.
A company spokeswoman said 65 of the company’s 600 employees at its headquarters near Loop 101 and Raintree Drive would be let go. JDA, which makes software for retailers to manage inventories, now has about 1,100 employees in 27 offices worldwide.
"We’re not going to continue to build-out the functionality with some of our products and merchandising systems so as a result of that, we don’t have the same requirements for a such a large amount of (research and development) investments," said Maureen Tuskai, a company spokeswoman.
She said no office consolidation will occur in Arizona.
In 2002, JDA announced a partnership with Microsoft and said it would transition several of its products over to a Microsoft.net-based environment.
"As a result, for a few years we were investing significantly in our products because we had the dual commitment to our customers to continue to enhance our existing products on their current platforms as well as begin the transition over to a new platform," Tuskai said. "We’re going to start to release in the first quarter of next year our initial delivery of products on .Net and we’re also releasing what we believe is . . . the best functionality within our classic products on the platforms that some of them have been on for 15 years."
The planned cuts include 96 product-development workers, 50 consulting-service employees and 22 sales and marketing associates, JDA said.
The company intends to cut 15 administrative positions and one training associate, but will add 17 people to its development team, it said.
The company will also cut 18 contractors in administration and seven contractors in product development on top of the staff reductions.
Recently, a JDA executive said its employees make an average of $55,000 to $60,000 annually.
The news sent shares of the company’s stock up Wednesday more than 6 percent, or 85 cents, to $13.97 a share on the Nasdaq.
JDA’s moves will reduce costs by $15 million to $17 million before taxes, the company said, but will lower fourth- quarter earnings before taxes by $3.2 million to $3.6 million.
JDA also expects to book a pretax charge of $1.4 million to $1.8 million in the first quarter to complete the restructuring plan, it said.
Tuskai said the company is implementing new software systems to operate more efficiently and its newer products require less resources.
"We have tried to reduce the cost for our customers by using the Internet and different technologies so that we don’t require our people to be on-site," she said. "So, with all these different advancements . . . we’re just able to be more efficient. It’s not like ‘Uggh, business is horrible, they have to have this huge layoff.’ That’s really not the case. It’s 13 percent, and if you look at where the cuts are being made, it’s primarily in development and it’s also in services. We’re transitioning from being in a constant state of new product development into support."
The once high-flying firm began an earnings rollercoaster in July 2002 when JDA’s stock took a 44 percent drop, from $27 a share to $15, after the company warned second-quarter earnings would fall short of expectations.
At the time, JDA chief executive Jim Armstrong said the weaker-thanexpected results were caused by "a change in timing" of several large contracts. Nevertheless, he said the company’s future business prospects remained fundamentally sound.
As the retail sector rebounded a bit in 2003, so did JDA’s stock, hitting a high in November of $22.36. The stock finished the year at $16.51.
In January, the company issued a profit warning saying some anticipated deals didn’t close. In October, despite an announcement that it entered into a licensing agreement with Sears, Roebuck and Co., JDA reported net income of $1.65 million, or 6 cents per share, for the third quarter ended Sept. 30, a decrease from the previous year’s $3.37 million, or 11 cents per share net gain.
The company also saw quarterly total revenue drop, down to $50.3 million with software revenue of $10.2 million, compared with total revenue of $58 million on software revenue of $19.1 million during the same period one year ago.