Updated from 5:08 p.m. EDTi2 Technologies ( ITWO) lost more than 20% of its value Monday evening, after the vendor of supply chain management software posted a disappointing third quarter, missing Wall Street's top- and bottom-line expectations. Net income was $9.4 million, or 33 cents a diluted share. (Net income available to common shareholders, which excludes dividends to preferred shareholders, was $8.6 million.) Analysts polled by Thomson First call were expecting a 38-cent profit. Revenue was $69.2 million, down 38%, or $111 million a year ago and well below analysts' estimates of $85.1 million. The stock closed the regular session with a gain of $2.40 a share, or 12.97%, likely indicating bullish expectations ahead of the announcement. But those gains and more were sliced from the stock after the earnings announcement hit the wires. The stock lost $4.25 a share, or 22%, to $16.25. CEO Michael McGrath said he was dissatisfied with the company's revenue performance and added that much of the shortfall was caused by internal problems related to the company's recent reorganization. "We've gotten through most of that," he said during an interview. Revenue from software licenses declined 16 percent to $14.6 million from $17.4 million, although last year's number included almost $4 million in revenue from a business unit the company sold earlier this year. Operating expenses, a key target of the company's new management, dropped to $55.4 million from $90.2 million a year ago. McGrath also said the magnitude of the top-line shortfall was somewhat misleading, because the GAAP numbers include so-called contract revenue which is nonrepeatable. When the company restated its earnings in 2001, certain revenue that had been recognized on the income statement, became, in effect, deferred revenue on the balance sheet and has been returning to the income statement quarter by quarter.