I2 Shares Plunge After Complaint on Product

From Bloomberg News

I2 Technologies Inc. shares tumbled 22% after Nike Inc. said problems with I2’s manufacturing-and-distribution management software caused the shoemaker’s third-quarter profit and sales to miss forecasts.

I2 dropped $7.94 to close at $27.56 as the stock posted its biggest one-day percentage decline in almost 11 months. It was the biggest decliner in the Nasdaq 100 Stock Index. I2 shares have declined about 73% from a record $111.75 in March.

Nike fell 19%, making it the biggest decliner in the Standard & Poor’s 500 Index.

Nike said after U.S. stock markets closed Monday that fiscal third-quarter profit would trail forecasts, with shoe sales reduced by $80 million to $100 million. It said problems implementing a new I2 supply-chain management system caused shortages of some products and overstocking of others.


I2 Chief Executive Sanjiv Sidhu said Tuesday that Nike hadn’t followed its advice on how to implement the software. Still, I2 is partly to blame for the problems because I2 engineers ran the implementation team, Sidhu said.

“The software wasn’t implemented well. I2 is partly responsible for that and we’re disturbed by that,” he said.

Getting supply-chain management software to work for apparel companies like Nike is a complex task because it’s difficult to predict demand for thousands of different styles, sizes and colors. Nike’s problems were compounded because it requested new functions that it agreed to help develop with I2, Sidhu said.

“The worst is behind us,” he said. “These problems can be overcome.”

It’s rare for I2 customers to have such serious problems, Sidhu said. Fewer than 5% of those who buy a standard supply-chain management package and do their implementation through I2 are dissatisfied with the results, he said.

Satisfied I2 customers include Dell Computer Corp., PepsiCo Inc. and Nokia, he said.

Nike’s Class B shares fell $9.57 to close at $39.60 on the New York Stock Exchange.