Copyright 1999 Securities Data Publishing
Securities Industry News
July 26, 1999
LENGTH: 284 words
HEADLINE: Neon's Buying Spree To Slow After 2Q Loss
BYLINE: Michael Dabaie
BODY:
New Era of Networks will slow its acquisition pace for the next several quarters, following its report last week of second-quarter revenue losses, said Neon CEO Rick Adam.
"We need to spend time consolidating our acquisitions, so we will spend a couple of quarters doing that," Adam said during a conference call last Wednesday announcing the firm's earnings. In the second quarter, Neon acquired four firms: Vie Systems, Convoy Corp., MicroScript and SLI International. Neon plans to shave about $3 million, or 15 percent, from its budget annually, Adam said.
Neon, based in Englewood, Colo., reported a second-quarter net loss of $6 million on revenue of $26 million. This is down from net income of $951,000 on revenue of $11 million in the year-ago quarter. Early warnings of the quarterly loss in the last few weeks prompted a sharp drop in Neon's stock price. After an April high of more than $78 per share, the firm's stock was trading in the mid-teens last week.
Adam attributed the second-quarter loss to sales that did not close in the quarter as expected and a shortfall from Neon's partnership with IBM. Under the deal, the sales forces of both vendors sell IBM's MQSeries Integrator, but the economics of the sale favor the vendor that initiated the sale. IBM recorded a higher percentage of sales than the firms anticipated, Adam said.
Adam would not break out performance for the financial services practice of Neon, but said it accounts for about 50 percent of the vendor's overall business. Neon recently named Douglas Jeffrey, former Swift general manager, president of the firm's global financial services business unit.
-Michael Dabaie
LANGUAGE: ENGLISH
LOAD-DATE: July 26, 1999
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