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Despite the plunge in the markets Thursday, the shares of i2 Technologies Inc. (NASDAQ: ITWO) were able to post a 6.6% increase to $18.08. The company, which develops supply chain software, announced its Q3 results. Actually, revenues fell $4.9 million to $66.4 million and net income was $4.5 million, or $0.17 per share.
But what got investors excited was i2's announcement that it is exploring strategic alternatives; that is, the company is thinking of selling out. JPMorgan Chase (NYSE: JPM) is the investment banker on the assignment.
In light of the recent spurt of tech M&A – such as Oracle Corp.'s (NASDAQ: ORCL) bid for BEA Systems (NASDAQ: BEAS) – it seems like a good move. Besides, i2's shareholders seem to be antsy. Keep in mind that hedge fund SAC is a major holder.
However, the major software vendors don't appear willing to pay premium prices. After all, the software seems to be maturing. Moreover, private equity firms have much less firepower (because of the credit crunch).
So, in the case of i2, don't expect a high-priced deal – if one even gets done.
Tom Taulli is the author of various books, including The Complete M&A Handbook
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Reader Comments (Page 1 of 1)
11-02-2007 @ 7:49PM
newi2 said...
i2 is a real supply chain management(SCM) company, its main competitors are SAP and ORCL.
i2 has been winning most complicate SCM deals because it deliveres the SCM results to its customers instead of selling the package software to customers like SAP and ORCL. Whoever buys i2 would immediately becomes undisputable leader of SCM provider.
If there's a company can't afford not to buy i2, it's SAP. Aside from losing huge deals to i2, it can't afford to lose the patent lawsuit i2 filed against it.
For the past 5-7 years, SAP sold $2.5 billions SCM software, i2 has a very good case and very confident that it will prevail.
If SAP loses, the penalty will be huge and i2 intend to ask court to stop SAP from selling, supporting and servicing its SCM products that infringed i2 patents.
i2 is totally under-valued by Wall Street, it has a huge patent portfolio, a $1.7 billions of NOL (net operation loss) credit, it's a profit company making about 90 cents a share per year.
i2 won't be sold cheaply, any thing less than $1.2-1.5 billion probably won't fly.
Can SAP afford to take the risk of losing in court? or can it tolerate ORCL having i2? I bet the answer is NOT.