Geac president tells shareholders conditions not right for selling assets
DAVID PADDON
Canadian Press
TORONTO (CP) - The president of Canada's largest software company was peppered with angry questions Tuesday from shareholders upset with Geac Computer Corp.'s (GAC) low share prices and the slow pace of its planned spinoff of a key business unit.
While Douglas Bergeron was quick to admit Geac shares are undervalued, he repeatedly called on shareholders to be patient. Diversified companies like Geac, which has grown to nearly $1 billion in annual revenues through a series of acquisitions, are not currently in favour with stock markets, Bergeron said.
That's why the company has hired CIBC World Markets to advise it on ways to maximize shareholder value, after it was approached by two separate parties with serious proposals, Bergeron said at the company's annual meeting Tuesday.
Despite repeated questions from the floor for more details about who had approached Geac, Bergeron refused to reveal specifics.
Bergeron said the company is in good financial shape and can afford to wait for the right time to act.
The company said its fiscal first quarter is historically its weakest period because of the buying patterns of its customers.
The problem was augmented this year, in part because of its acquisition of British-based JBA Holdings PLC, which has an even greater slowdown in the summer months than Geac.
Earlier, David Wright, an analyst with BMO Nesbitt Burns, said Geac's first-quarter results were not as good as he expected but it's too soon to tell how soft the current fiscal year will be for the company.
"Typically the January quarter is their best one. If you're going to see a turnaround, that's the one to look for," Wright said.
Geac reported late Monday it lost $44.3 million on continuing operations in the three months ended July 31, the first quarter of its financial year. This compared with a year-earlier operating profit of $47.6 million.
Net profits, however, were $49.2 million, up from $38.5 million a year earlier, thanks to a $92.8-million gain on the sale of Geac's banking systems business.
That sale enabled Geac to cut its bank debt by more than half, to $64.1 million from $139.3 million.
Revenue from continuing operations rose to $212.5 million - including $75.5 million from acquisitions made since mid-1999- from year-earlier sales of $192.7 million.
Geac grew to be one of the world's biggest e-commerce software companies through a series of acquisitions, including 11 in the last year. However, analysts have said Geac's share price does not reflect the value of its component parts.
Last week, Geac said CIBC World Markets has been hired advise on "potential transactions involving part or all of its businesses."
Bergeron told shareholders that everything from no sale to an outright sale of the whole company was on the table. |
