Baan to restructure following Q3 loss

ERP software developers have stood fast as their market fluctuates daily based on Wall Street's whims. Now Baan has blinked. The Dutch software manufacturer reports a startling $31.7 million loss for the quarter, a 20% dip in license revenues and stagnant North American revenues, and has announced a restructuring and a 20% workforce reduction to bring costs down and streamline operations. Standards & Poor's today placed Baan on a negative credit watch; Baan's stock remains unchanged at $11 per share.

Baan will consolidate sales, marketing, consulting, support and engineering efforts of acquired companies, eliminating redundant job positions amounting to a 20% global workforce reduction. Baan plans to report against next quarter's results a one-time, pre-tax charge of approximately $110 million.

Among the reasons blamed for the loss are global uncertainty, increased competition, reduced spending from large accounts, and loss of IT dollars now being funneled into Y2K projects. Baan also says its customers are now looking at lower-cost, easier-to-install and maintain ERP applications, a need which has led to the emergence and success of smaller ERP players like J.D. Edwards. A common complaint of the three major ERP players -- Baan, SAP and Peoplesoft -- is that their software systems are cumbersome, slow to install and expensive.

"By streamlining operations today, we have the flexibility, cost structure and management focus that allow us to continue to drive innovation and maintain thought leadership in the enterprise applications space moving forward," said Tom Tinsley, Baan Chairman and CEO