Descartes Systems Group Inc. says it is experiencing a dramatic sales slowdown, and warned it would miss sales targets for its second quarter by up to US$8-million, reports the National Post. Descartes’ share price dropped as a result, closing at at $13.49 yesterday.
The revenue shortfall has led to layoffs for 70 employees, some ten per cent of Descartes’ workforce. The job cuts will occur in all areas, Peter Schwartz, chief executive, told the National Post.
According to analysts polled by First Call/Thomson Financial Corp., Descartes was expected to post revenue of US$27-million and profit of US9 a share for its second quarter of fiscal 2002, ended on July 31.
Instead, the company said it would have sales of between US$19-million and US$20-million and an operating loss of US11 a share.
In the net loss portion of the equation, Descartes now expects a loss of US38 to US40 a share. The loss includes a bad debt charge of US$3.5-million, which the firm said was caused by a rash of failures in the dot-com industry.
Schwartz told the Post that while business transactions are not falling off completely, they are just taking longer to close. But Schwartz expects that business will pick up again in coming months, adding customers who are not buying now, would likely buy later.
Descartes was among the last technology businesses in Canada to continue to see significant revenue growth in a time when most tech firms were guiding sales targets downward.