Software vendor Cognos issues earnings warning

Software vendor Cognos issues earnings warning

Canadian business intelligence software vendor Cognos has announced it plans to lay off about 300 people amid lower-than-expected earnings in its fiscal first quarter.

The business intelligence software vendor warned that expected revenue for the quarter will be between $US106 million and $110 million, compared with $108.7 million during the same period last year. The net results for the first quarter, excluding special charges, could mean break-even earnings or a loss of up to $4 million, or about four cents per share, according to the company.

During the same quarter last year, the company had net income of $12 million, or 13 cents per share.

In response to the earnings drop, Cognos is taking cost-cutting measures, including reduced discretionary spending and the layoff of about 10 per cent of its worldwide staff.

Cognos said it will take a special pretax charge of approximately $13 million, or 10 cents per share, in the first quarter to cover the layoffs and other cutbacks.

"A decision like this is a difficult one because it affects our people, who I believe are the best in the industry," said Cognos President and CEO Ron Zambonini, in a statement. "However, I did state during my last remarks to the investment community in April that we would manage our operations prudently during this period of economic uncertainty, and this workforce reduction is an indication of this commitment."

Cognos is scheduled to report its complete first-quarter 2002 earnings on June 21. This is the second straight quarter in which the company's sales have fallen below expectations, following fourth-quarter results that were said by Zambonini by postponements or reductions of large software purchases that had been planned by users.

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