Lawson Software is the latest ERP vendor to fall victim to a turbulent economy, reporting an 18% decline in revenue in the third quarter of its 2009 fiscal year. Despite the large drop in top-line growth, the company managed to keep its operations healthy as a result of recent cutbacks within its organization.
For the third quarter ended Feb. 28, 2009, Lawson reported net income of $7.4 million on sales of $173.8 million. In the same period last year, Lawson earned $727,000 on revenue of $212.9 million. The company cited a decrease in both the number and size of deals it is closing, as customers are making smaller purchases, company officials said.
Aside from the bleak economic indicators, it was the strengthening dollar that really took a toll on the software provider, which does nearly half of its business outside the United States. And, while healthcare and the public sector, into which Lawson sells it S3 Enterprise Management product, have been performing well, manufacturing — one of the industries hardest hit by the global recession — has cut back on orders of Lawson’s M3 software suite.
“M3 sales were slow year over year,” said Harry Debes, Lawson president and chief executive officer, during a conference call with analysts Thursday. But, he said, the order pipeline took a slight uptick last quarter, which is an encouraging sign. “Prospective customers are waiting for the economy to show improvement before they commit to long-term ERP contracts,” he said. But there are deals to be had, and Lawson is winning some of them, he added.