Skip to main content

Shares of

JDA Software


plummeted Tuesday and dragged down competitor



after JDA warned that third-quarter results would come in short of guidance.

Shares of JDA Software declined $4.55, or 35.8%, to $8.15 in recent trading. Retek shares fell 51 cents, or 11.6%, to $3.88. The Goldman Sachs software index lost 2% in recent trading.

JDA, which makes supply-chain software for the retail industry, said Monday after markets closed that "it is probable" that it will not meet its software license revenue guidance for the quarter ending Sept. 30. The company's previous guidance pegged software license revenue at between $18 million and $20 million and earnings of 18 cents to 20 cents a share.

Because the company does not expect to achieve those numbers, JDA also said it expected its operating results to be "negatively impacted." The company did not provide updated numbers.

Wall Street analysts were expecting JDA to post earnings of 15 cents a share on $56 million in total revenue according to estimates gathered by Thomson Financial/First Call.

The supply-chain sector, which depends heavily on large deals, has been particularly trounced by the slowdown in IT spending. But JDA Software and Retek began suffering the pain a little later than other supply-chain vendors such as

i2 Technologies



TheStreet Recommends


(MANU) - Get Manchester United Plc Class A Report

because the retail sector -- their core market -- also began hurting a little later than other markets.

"Disappointments from retailers such as

Best Buy

(BBY) - Get Best Buy Co., Inc. Report


Radio Shack


and cautious current-quarter commentary from



underscores our view that retail CIOs are becoming increasingly cautious regarding signing new deals in the face of weaker-than-expected results," Salomon Smith Barney analyst Heather Bellini said in a note Tuesday. Bellini has an in-line rating on JDA Software and her firm hasn't done banking business with JDA.

Bellini lowered her third-quarter earnings estimate on JDA to 6 cents from 15 cents and license revenue estimate to $12.8 million from $16.5 million.

In a note, Stifel Nicolaus analyst C. Gregg Speicher said he believes investors can expect layoffs if JDA does not meet its target range of $175,000 in revenue per employee. "JDA's preannouncement supports our hypothesis that recent declines in consumer confidence and same-store sales have worried retailers who typically begin budgeting for 2003 around September," he wrote.

Speicher has a market perform rating on JDA Software and his firm hasn't done banking with the company.