Zi Corp Sees Profitability In 2001
By PAUL HAAVARDSRUD
Of DOW JONES NEWSWIRES
TORONTO -- Despite hard-to-predict forces that are causing many
technology companies considerable heart-ache, Zi Corp. (ZICA) said it has
"clear vision" into 2001, and projects it will reach profitability in the coming
year.
Michael Lobsinger, the company's chairman and chief executive, said Zi
Corp. will "definitely be profitable" in 2001, adding that within the next 30 to
60 days the company will be able to more-accurately forecast exactly when
the bottom line will turn black.
"With the contracts that we are anticipating signing in the first quarter of next
year, along with the new implementations that are going into the marketplace,
we should be able to tell in the first quarter of next year when we are going to
be profitable," Lobsinger said.
Calgary-based Zi Corp.'s core product is language-enabling interface
software, which allows messages to be sent and received in up to 35
languages. The company currently has 41 licensees supporting its
royalty-based revenue model, the most notable of which are Alcatel S.A.
(ALA) and Ericsson Communications Inc.
In 2001, Zi Corp. said its eZiText product will be embedded in all of the cell
phones made by Alcatel, about 25 million, according to Lobsinger.
Lobsinger said Zi Corp. sees royalties of between 15 cents and $1 a unit,
depending on the product and the agreement.
Despite having a "clear sense" of what royalties will be from Alcatel and
Ericsson, Lobsinger declined to offer revenue or earnings projections for the
fourth quarter of 2000 or for 2001, reiterating that the company will be able
to provide accurate financial projections in the first quarter.
Licensed To 'Best Performers In The World'
Like most royalty-based companies, Zi Corp. depends on both the strength
of its partners and the rate of market adoption for its success, Lobsinger said,
adding that 2001 will be a good year for Zi Corp., given that the company
has, "licensed our technology to the best performers in the world."
Zi Corp. was started in 1993 with the vision of reaching large
relatively-untapped markets such as China. Essentially an R&D company until
1998, the company released its first product in August 1999. After seven
years of building infrastructure and adding relationships, Lobsinger said 2001
shouldn't see any surprise costs popping up.
Zi Corp.'s revenues have increased steadily over the last five quarters,
Lobsinger said, noting that he expects its current fourth quarter will follow suit.
In the first nine months of 2000, the company had a loss of 18 Canadian cents
a share compared to 13 Canadian cents a year earlier. Revenues in the first
nine months were C$3.4 million compared to C$1.4 million through the first
three quarters of 1999.
At the end of the third quarter, Zi Corp. had about C$51 million in cash, and
has a burn rate of about C$5 million to C$6 million a quarter.
"We have at least 10 quarters of cash and, as revenue revs up, that cash will
be used for other things," Lobsinger said. "We have a very keen eye on
acquisitions for products or companies that are in the space that we are in."
"We are pretty excited," Lobsinger said. "It's been seven years in the growing
pains and we're now in a funny tech market, but we are well cashed-up and
we've got a business model that works, that is based upon royalty
revenue...we are very proud of where we are."
After hitting a 52-week low of 3 1/8 on Tuesday, in Nasdaq trading on
Friday Zi Corp. is up 7/16 to 4 11/16 on about 265,000 shares. During the
spring technology run-up, the stock traded as high as 40 7/8. |
