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Reynolds and Reynolds Announces Q3, Kills Series SuiteReynolds and Reynolds announce their Q3 and Series Suite death. BY DAVID SIMS TMCnet CRM Alert Columnist The Reynolds and Reynolds company today reported third quarter results as it said it will no longer sell its Reynolds Generations Series Suite dealer management system, resulting in a charge in the company's fourth fiscal quarter. Reynolds reported revenues of $247 million for the third fiscal quarter ended June 30, 2005, which were 2 percent higher than a year ago. Net income was $24 million and earnings per share were 37 cents, 12 percent higher than a year ago. The company's decision to discontinue the Reynolds Generations Series Suite DMS software product, installed in over 70 dealership locations since its introduction in September 2003 will result in a capitalized software development writeoff of $67 million in its fourth fiscal quarter ending September 30, 2005. There may be "additional costs" in the fourth fiscal quarter, company officials say. MarketWatch analyst Steve Goldstein says the company sees "fiscal year earnings between $1.37 and $1.41 excluding the write-off, on 'essentially flat' revenue." "We have concluded that Suite is not the broad-based solution for the majority of the U.S. automotive retail market that we originally believed," O'Neill said, adding that it requires substantial change in dealership processes to provide the desired usage levels and benefits. "Implementation and training costs are high for our customers and for Reynolds and Reynolds," and fixing all its problems would "require a continued, significant investment of money, technical resources and time that we cannot justify," O'Neill explained. Third quarter earnings per share includes a 3 cent benefit primarily from lower tax rates. Revenues in the company's largest segment, Software Solutions, were $201 million, 3 percent higher than a year ago. The Documents segment revenues declined 3 percent compared to a year ago. Revenues in the Financial Services segment declined 17 percent, as a result of continued lower interest rates and a decline in the size of the receivables portfolio. "We're experiencing competitive pricing pressures we expect will continue," Fin O'Neill, president and CEO, said. Sales of CRM products including Professional Services, Reynolds Web Solutions and Contact Management were "solid" during the quarter, O'Neill said. In early January the company announced it will pay newly-named President and Chief Executive Finbarr J. O'Neill at least $750,000 a year. He will be eligible for "an annual bonus based on corporate and personal performance objectives, with a target of 70 percent of his base salary and a maximum bonus of 140 percent of his base salary, the Securities and Exchange Commission filing said," according to the Detroit News. For the year ending Sept. 30, the new CEO will receive a guaranteed bonus of at least $393,750, the News reported: "He will receive a signing bonus of $200,000, options to purchase 300,000 shares of Reynolds and Reynolds Class A common stock with a vesting schedule of 33.3 percent a year and a restricted stock award of 70,000 shares." O'Neill, who last served as president and CEO of Mitsubishi Motors North America, replaced acting CEO Philip A. Odeen, who remains chairman of the company. In the third quarter Reynolds repurchased 1.7 million shares for $46 million at an average price of $26.98. Approximately 2.9 million shares remain authorized for repurchase. Discontinuing Suite lets the company focus on other investments, and "we will be stepping up our investment in our ERA dealer management system," O'Neill said. ERA is a widely-used broad-based DMS product, used by over a half million dealership personnel at more than 10,000 dealership locations. "We are a dealer services company. Our value lies in being a total solutions provider, delivering the systems, applications and services that dealers need - from consulting to networks to documents to technology to support," O'Neill said. "Everything we do as a company must be focused on helping dealers sell and service more cars, take better care of their customers, drive down costs and become more profitable. That is our mission." ----- David Sims is contributing editor for TMCnet. For more articles by David Sims, please visit: http://www.tmcnet.com/tmcnet/columnists/columnist.aspx?id=100005&nm=David%20 Sims |