Baan Co. is struggling to stay afloat. The vendor of enterprise resource planning software announced today it will report revenue of approximately $142 million and a staggering net loss of $250 million for its fiscal fourth quarter ended Dec. 31.
Baan blamed the poor results on an industrywide decrease in demand for ERP software, as well as on a radical restructuring plan that includes personnel reductions, office closures, sale of businesses, and write-down of certain assets. Baan said charges for these activities will account for approximately $160 million of the quarterly loss.
On the bright side, Baan said it generated about $100 million of new license contracts in the fourth quarter from such customers as AT&T, Delta Airlines, and Volvo. All told, Baan signed license agreements with 567 customers, of which 374 were new relationships.
Baan also said it has purchased the core assets of Baan Midmarket Solutions--the entity that resells Baan software into the indirect channel--from Vanenburg Ventures, which is Baan's largest shareholder. Red flags began flying earlier when it was revealed that Vanenburg funded a number of subsidiaries that acted as resellers of the Baan software suite, giving the impression that Baan was stuffing product into these affiliates and recognizing revenue whether or not the affiliates had customers. Baan today emphasized that it has entered into negotiations with Vanenburg regarding the purchase of other software companies owned by Vanenburg.
As part of the restructuring, Baan said it has reduced its workforce by about 1,250 employees in the quarter, bringing total headcount to about 4,975 worldwide. Additionally, 50 offices were closed or consolidated, and 14 businesses were sold or are in the process of being sold.