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More Hard Times For Baan

Struggling ERP software vendor Baan Co. may be taking further drastic measures to revitalize its bottom line. The company has already said it expects to report a loss of $250 million when it announces its fourth-quarter results on Tuesday. But according to an internal memo leaked to The Wall Street Journal, Baan president Mary Coleman said she plans to slash expenses by $15 million and possibly eliminate more jobs.

"I can't promise that there will be no more layoffs because we don't have a clear picture of market demand for enterprise applications over the next few quarters," she said in the memo. She also said that while Baan would replace departing employees in sales and services, it would probably not rehire in the areas of marketing, administration, and research and development. Additionally, she said the company will cut back on a vast array of expenses such as employee travel, mobile phone charges, and office supplies.

Though the entire ERP market is experiencing hard times, Baan has suffered more than most due to a series of poorly executed acquisitions and accounting missteps. "I wouldn't be surprised to see more layoffs as part of an effort to slash internal costs," says Steven Kahl, a financial analyst with Piper Jaffray Inc. "Even looking at the general ERP slowdown, Baan is more at risk given their current business model."

Commenting on the contents of Coleman's memo, Baan released a statement saying "the memo reflects the complex decisions that must be made to compete effectively in a very challenging marketplace."

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