Shares of

i2 Technologies

(ITWO)

climbed Monday as investors responded to news of more layoffs, a reduced risk of delisting and one analyst upgrade Friday.

Shares of i2 rose 26 cents, or 21.9%, to $1.46 in trading that was more than twice average volume. Shares of i2 are up more than 200% from a 52-week intraday low of 41 cents at the beginning of October.

In its 10-Q filing Friday, i2 disclosed that it received a delisting notice from

Nasdaq

because its stock had traded below $1 for more than 30 consecutive trading days, its stockholders' equity had fallen below $10 million, and its net tangible assets had fallen below $4 million, in violation of listing standards.

But with the recent rally, i2's chances of delisting appear slimmer, apparently prompting some buyers, said RBC Capital Markets analyst Cameron Steele, who has an underperform rating on the stock. His firm hasn't done any banking with i2. He added that i2's rally could be driven in part by bottom-fishing, noting that other companies whose shares have been hammered, such as

Kana Software

(KANA)

, enjoyed a run-up Monday too.

Steele also said investors may be responding to i2's plans to cut 15% of its staff, disclosed in the 10-Q filing, in order to return to profitability next year. "I think that's good news because investors want profitable companies right now, and I don't see that changing anytime soon," he said.

Indeed, the company's restructuring prompted SoundView analyst Peter Coleman to upgrade his rating on i2 Friday to neutral from underperform and raise his estimates. With the company hoping to bring down expenses to $100 million by the first quarter 2003, Coleman raised his first-quarter earnings estimate to a pro forma loss of a penny from a loss of 5 cents. Coleman also raised his second-quarter and third-quarter earnings estimate to a penny each in pro forma profit from a pro forma loss of 4 cents in the second quarter and a 3-cent loss in the third quarter. He upped his fourth-quarter estimate to earnings of 2 cents a share from a loss of 3 cents a share.

"In our view, following some amount of time for investors to digest whether additional cuts portend to weaker demand, they are likely to embrace the more positive outlook on profitability," Coleman wrote. His firm hasn't done any banking business with i2.

But i2 is hardly out of the woods yet. Coleman noted that the supply-chain sector that i2 has dominated continues to grapple with limited growth. The sector has been reeling as companies avoid large deals and complicated software implementations and cut back spending overall.

In addition, i2 disclosed in its 10-Q filing that two former employees have contacted the company's board of directors about various charges related to accounting and revenue recognition, inadequate financial controls and gross negligence or potential fraud in connection with product and customer problems, acquisitions, public disclosure and other management decisions. Based on an audit committee investigation, the board concluded there was no merit to the charges, which came from employees who had previously made claims against i2 seeking monetary relief.

Meanwhile, speculation has been swirling around potential mergers and acquisitions involving i2, with either another company acquiring i2 or i2 selling off some of its assets, Steele noted. "They

i2 don't necessarily need the cash, but since they have a lot of debt on the balance sheet, raising cash wouldn't necessarily be viewed as a negative thing," he said.

The company's long-term debt of $410.9 million nearly surpassed the company's cash and cash equivalents total of $419.4 million as of Sept. 30.