Company News — Descartes Systems Group Inc.

« Return to List

Descartes Systems Group stock up as troubled firm cuts 35% of workforce

Monday, May 17, 2004

TORONTO (CP) - Descartes Systems Group is cutting 135 jobs, or about 35 per cent of its workforce, as the troubled logistics software company attempts to recover from a recently discovered revenue shortfall.

Descartes stock, which had been beaten down to all-time lows recently, gained more than 10 per cent from Friday's close after the company announced it hopes to cut quarterly costs by $7 million US by autumn.

The shares (TSX:DSG) traded at $1.55 on the Toronto Stock Exchange late in the trading session, up 15 cents from the previous close but still well short of their 52-week high of $4.65.

The company, which fired its chief executive officer on May 6, said last week that a restructuring was necessary, and added Monday that it will close offices and cancel leases, consulting and other contracts.

"The actions we are announcing today will enable us to move toward our goals of positive cash flow and earnings," said chief financial officer Brandon Nussey, one of two executives who took over leadership of the company when CEO Manuel Pietra was fired after Descartes failed to collect millions of dollars from overseas customers.

The company didn't provide an update on the factors leading to Pietra's sudden dismissal, which had provoked a 39 per cent plunge in the stock price on May 7. The stock hit an all-time low of $1.32 on Thursday.

Descartes said Monday that details on the expense cuts and its financial results for the quarter ended April 30 will be issued June 2.

Revenue has suffered because of the failure to collect payments, particularly from a major account in China.

Descartes, which reports in U.S. dollars, has estimated the loss in its first quarter at 27 to 25 cents a share - more than double the previous expectation of 13 to 11 cents a share.

Descartes has more than doubled its provision for doubtful accounts to $8 million from $3 million.

© Copyright 2004 The Canadian Press

« View Descartes Systems Group Inc. Profile

« Return to List

Please Note: Neither CanadaIT Ventures Inc. nor Venture Management Services accept responsibility for the accuracy, timeliness or adequacy of the information shown or comments made at this site.

© 2010 CanadaIT Ventures Inc.