Aspen Technology endures profit plunge

When it rains, sometimes it pours. Just ask Aspen Technology Inc.

The Cambridge software company last year had to restate five years' worth of earnings reports, resolve a 30-month-long federal antitrust probe of its takeover of a Canadian company, and battle to keep its shares listed on the Nasdaq Stock Market. Then its chief executive, David L. McQuillin, quit in November.

And Aspen landed at the top of a Globe 100 list no company wants to be on, posting the biggest profit-to-loss nose dive of any public company in Massachusetts.

After barely turning a profit in 2003, $2.2 million worth, Aspen swung to a $77.2 million net loss last year, piling up as much new red ink as the next five companies combined.

''The company's been hit with a number of unusual items," said company spokesman Joshua S. Young.

Aspen software is used by chemical and petroleum companies and other process manufacturers to manage their supply-chain operations, run factories, and simulate industrial operations to make them more efficient.

It's had little sustained revenue growth recently and faces fierce competition from a number of huge global technology conglomerates, including ABB, Honeywell International Inc., Invensys, and Rockwell Automation Inc., and a phalanx of boutique software firms.

But a big driver of last year's profit nose dive was the earnings restatement, which involved the problem of deciding when to count sales as revenue.

After a long investigation, company auditors concluded that $19.5 million of sales recorded in 2000 and 2001 -- involving software Aspen sold to resellers who then sold it to customers -- should have been deferred to later years, when the product was actually bought by the end users.

That made 2003 revenue look better than initially thought, and the 2003-to-2004 profit plunge worse than it really was.

''It's not that 2003 was a blowout year," Young said. In the way Aspen recommends comparing revenue, which differs from Globe 100 methodology, Aspen suffered a $69.6 million one-year hit.

New chief executive Mark Fusco expresses hope the worst of the ''multiple challenges" is well behind for Aspen, which in recent months has closed software-license deals with companies including oil giant BP PLC, Owens-Corning Fiberglas Technology Inc., and pharmaceuticals giant Pfizer Inc.

''Our entire management team is finally in a position to focus on executing our business strategy," Fusco said.

Peter J. Howe can be reached at howe@globe.com.