After an eight-month search for new leadership, supply chain software supplier i2 Technologies, Inc. reached into its board of directors and named Michael E. McGrath as the company's interim president and chief executive.
i2, which recently reported a revenue slide of 21% and a loss of $3 million for 2004, said McGrath replaces founder Sanjiv Sidhu, who will remain chairman until McGrath completes a restructuring plan. i2 said in July 2004 that it was looking for a new CEO.
In a conference call yesterday, McGrath said his "first and foremost priority" is to restore investor confidence in i2 and return the company to profitability. To do this, he said he would re-focus and re-size the $389 million company. He said he would detail how he would do this in the next 30 to 45 days
"We know where the cost reductions need to take place, and we will be aggressive," he said. "The reductions will make us profitable." In the fourth quarter of last year, i2 reduced headcount by 65, to 2.044 employees.
McGrath also said that his second major objective is to lay a foundation to enable the company to re-start growth. His third objective is to focus the company's resources, including its people, to "get results for customers." His fourth objective, he said, is to "re-ignite the passion" within i2 and among its partners and customers for the work the company does in supply chain management.
Once the restructuring is completed, McGrath said he would undertake a search for a new chief executive and assume the role of chairman of the board, succeeding Sidhu. When that happens, Sidhu will continue as a director of the company he founded in 1988. Sidhu, McGrath said, "will continue to be the visionary and outward face -- the heart and soul -- of the company."
McGrath joined the i2 board in August of 2004. He is the co-founder of Pittiglio Rabin Todd & McGrath, a management consultant to technology-based companies. In 1993, McGrath created the Supply-Chain Operations Reference model, also known as the SCOR model, to define the supply chain management process concept. In 1998, McGrath founded IDe, a provider of development chain management products.
The appointment of McGrath follows several years of financial difficulty for i2, which in 2000 became the first, and still only, supply chain management software company to crack the $1 billion barrier.
In 1999 as the SCM market was growing, i2 launched an ambitious strategy it called TradeMatrix, which was positioned as an all-inclusive platform for e-business that included supply chain management tools and software for design, procurement and other functions. TradeMatrix was to be assembled partly through a series of acquisitions.
But by the spring of 2001, as the economy slowed, i2 began to go off track. In April of that year i2 said customers were delaying purchase decisions and that it would have to cut its workforce by 10%. In May, Sidhu stepped aside as CEO and named Greg Brady to head the company, but Brady lasted in the post only a year before Sidhu re-took the CEO reins.
By the time of the company's annual Planet user conference in May of 2003, i2 was dealing with a re-audit of revenue for 2000 and 2001, an SEC investigation, a delisting of its stock from the NASDAQ National Market and an investor suit over the re-audit. During this period, competition from enterprise software suite vendors such as SAP was intensifying.
At Planet 2004, i2 announced that a private investment firm had agreed to increase its stake in the company by $100 million and that Sidhu himself had made a $20 million equity investment.
Most of i2's legal difficulties have been settled, but i2 chief financial officer Katy Murray said on the conference call yesterday that one shareholder action, instigated by shareholders not agreeing to the settlement of an earlier suit, is still pending.