June - 2003 issue > Feature

By Rahul Chandran

WHEN SHOE MAKER GIANT NIKE HELD A BOTCHED i2 installation responsible for missing its 2000 third quarter estimate, it marked the turn in supply chain management (SCM) solutions company i2 Technology’s fortunes. The company, which until then had notched up an array of impressive customers, saw confidence and stocks plummet when Nike CEO Phil Knight famously asked, “This is what I get for our $400 million?” referring to the total cost of the integration project.

The Beaverton, Ore.-based sneaker maker saw profits drop by $48 million, year on year, allegedly due to the sort of inventory glitch that i2’s software was expected to solve. The Nike incident was just one of several that saw the business applications maker stutter on its path to the top.

In the heydays of 2000, however, naysayers would have been laughed at. Convinced that the supply-chain market would be huge, Sanjiv Sidhu quit a job at Texas Instruments in 1988 and wrote code in a small Dallas-area apartment. Started as a bootstrap company with no venture capital, i2 filed an immensely popular IPO in 1996; and Sidhu went on to become the richest Indian immigrant in the U.S., with a personal wealth of some $7 billion. The $9.3 billion mega-merger with Aspect Development, a supply chain services company followed in 2000, further pushing i2’s stocks to the roof. And then the bust happened. And with it i2’s bright star began to fall.

The situation came to a head when the SEC launched an investigation, provoked by claims of wrong financial reporting by former employees. A spate of resignations—ranging from head of worldwide sales Reagan Lancaster to chief executive Greg Brady—completed the rout. From historic highs of $120 in early 2000, the company’s shares plunged to $0.41 in late 2002.

The company failed to file its 2002 Form 10-K. A NASDAQ delisting notification followed. i2’s ticker symbol was changed to ITWOE until it fulfilled the requirements of the marketplace.

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