| BUSINESSWEEK ONLINE : OCTOBER 25, 1999 ISSUE | ||||||||
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| INFORMATION TECHNOLOGY
i2: The Early Bird Gets the Market A year ago, the outlook was bleak for i2 Technologies Inc. (ITWO), the leading supplier of software for connecting manufacturing companies with their suppliers. Mighty SAP, the king of corporate software, was launching a competing product. J.D. Edwards & Co. (JDEC), Oracle Corp. (ORCL), and other software giants were also entering the fray. Wall Street felt i2 would be crushed, and it sent the company's stock price tumbling from 42 to 12. So much for the conventional wisdom. Sales at i2 spurted 53%, to $146 million, in the quarter ended Sept. 30, and the company's net income soared nearly threefold, to $10 million. Its share price is now at a record high of 53. ''People thought SAP would freeze the market, but i2 kept rolling on unfazed,'' says analyst Larry Lapide of AMR Research in Boston. QUICKER, SIMPLER. Chalk it up to i2's headstart. Its customer list is topped off by hypercompetitive high-tech manufacturers such as Dell Computer (DELL) and Compaq Computer (CPQ) that are unwilling to wait for SAP or others to get their software up to speed. Also credit the Web: It has put a new emphasis on supply-chain software--since executives are searching for ways to use the Net to make their interactions with suppliers quick and simple. ''The Internet is changing the rules of the game,'' says Sanjiv S. Sidhu, the founder and CEO of i2 in Irving, Tex. For customers transforming their operations into e-businesses, i2's software is vital. It helps Dell synchronize its component orders with production schedules. Meanwhile, Texas Instruments Inc. (TXN) uses i2 software to manage the production and shipment of 120,000 semiconductor orders each month. The biggest strength at i2 is its technological lead. Even Kevin McKay, CEO of SAP America, concedes the technology in the forthcoming update of his company's supply-chain software is still six months behind i2's. Legg Mason Wood Walker Inc. analyst Christopher Desautelle calls even that concession an exaggeration. ''i2 is light-years ahead, and the other guys aren't going to be able to catch up,'' he predicts. At i2, the marketing approach has been as important as the technology. Instead of promoting technical specs, i2 pledges to help companies save money. The company gets paid based on the results its software produces. So far, i2 has delivered a cumulative $7 billion in savings, according to Miller-Williams Inc. in Atlanta, a market researcher. ''That message really resonates,'' says Doug Kaewert, a vice-president at Sun Microsystems Inc., an i2 customer. Now, Sidhu has aggressive new ideas to expand into new industries, including automobiles and retail. On Oct. 12, he outlined plans to set up Web marketplaces linking retailers with their suppliers and customers. But he's also got to keep up with nimble upstarts such as Syncra Software Inc. in Cambridge, Mass., whose software allows buyers of materials and their suppliers to compare sales forecasts. ''There's no limits to their technology, but as with any big company, they'll hit roadblocks,'' says Tim Andreae, a Syncra vice-president who formerly worked at i2. Right now, though, i2 is flying high. For Sidhu, whose 37% stake in i2 is valued at $1.5 billion, the outlook is anything but bleak. By Steven V. Brull in Los Angeles _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP |
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RELATED ITEMS Enterprise Software: A Belated Rush to the Net CHART: Sales of Enterprise Software Are Slowing...So New Targets Are the Customer Service Market. CHART: ...Programs Connecting Companies to Suppliers...And E-Commerce Software for Powering Web S TABLE: How the Corporate Software Giants Stack Up CHART: SAP Stock Price CHART: Oracle Stock Price CHART: PeopleSoft Stock Price CHART: J.D. Edwards Stock Price i2: The Early Bird Gets the Market INTERACT E-Mail to Business Week Online | |||
