Well, it seems the market hasn't turned cartwheels over the quarterly results. Guidance doesn't look too bad to me, but then there's a lot of uncertainty out there. I wonder how low CDV can go before it finds support? I sold out in the high $16's just because I thought the overall market was headed to the crapper. Glad I haven't bought back in yet, but I am certainly looking for the bottom...
COM DEV Announces First Quarter Results
On Track to Achieve Almost 50 Percent Revenue Growth as Forecast,
Despite Uncertain Wireless Markets
CAMBRIDGE, ON, Feb. 28 /CNW/ - COM DEV International Ltd. (TSE:CDV) today
announced results for the first quarter ended January 31, 2001. Steady revenue
numbers in COM DEV Wireless, solid growth in COM DEV Space and a successful
new wireless systems sales initiative in Africa have led the Company to
conclude that, despite lowered 3G sales projections industry-wide, the Company
will still achieve strong revenue growth for the year. As expected for the
quarter, even after spending $4.7 million in expenses associated with the
continued investment in development of M/ERGY(TM), the Company generated a
small operating profit prior to finance charges. Looking forward, we
anticipate a weaker second quarter prior to returning to strong growth in the
third and fourth quarters. For this fiscal year as a whole, we now forecast to
break-even from operations, despite ongoing development costs associated with
M/ERGY and lowered 3G sales projections.
First Quarter Summary
Revenue for the first quarter ended January 31, 2001 increased 43% to $60
million compared with $42 million in the first quarter of 2000.
After finance charges, the Company recorded a net loss for the first
quarter of $0.45 million or one cent per share compared with a net loss of
$3.9 million or 12 cents per share in the same period a year ago. Within this
total, COM DEV Wireless and COM DEV Space generated revenue of $32.1 million
and $27.9 million, respectively. In doing so, COM DEV Wireless revenue grew
22% from $26.4 million and COM DEV Space revenue grew 79% compared to $15.6
million in the first quarter of 2000.
Margins for the quarter in both COM DEV Space and COM DEV Wireless were
approximately the same at slightly more than 28%. COM DEV Wireless was
favourably impacted by higher margins on initial shipments of 3G and wireless
systems products. Compared to the first quarter of last year, research and
development and selling and general expenses increased due to the M/ERGY
product development and the ramp-up of operations in Suzhou.
CEO's Assessment
"Given the turbulent and uncertain environment in which we are operating
today, I believe our results and our prospects for the remainder of the year
have held up well," said Keith Ainsworth, CEO of COM DEV. "The anticipated
build-out of 3G wireless infrastructure in Europe and the ramp up of full
wireless production in Suzhou look like they may be stretched out for several
months. However, we took a conservative perspective in generating this year's
forecast and this, combined with stronger than previously forecast performance
by COM DEV Space and new wireless system sales in Africa, will largely
neutralize the impact on our top- line forecast.
The qualification of Chinese suppliers and the building of relationships
with Chinese customers have proved to be complex. In response to difficulties
in China, I have dedicated new executive resources from COM DEV Space to
augment the COM DEV Wireless team in China. I continue to believe that in the
coming years, China, as the world's largest wireless market, is worth our
investment and that it will shortly begin to drive more significant revenue
growth in COM DEV Wireless.
The rapidly changing 3G market assessment took us by surprise as it did
the rest of the world. However, I believe we are in a better position than
most to deal with it. Having been through the process of introducing new
systems before, we took a conservative approach in forecasting and preparing
for the new 3G business. Third Generation cellular is still expected to emerge
as a major new global market, albeit somewhat further in the future than was
considered to be the case even a month ago. In the interim, it seems likely
that our 2G and 2.5G products will get a larger and longer run than we
previously anticipated. The uncertainty of the 3G market may also make the
fractional cost of deploying M/ERGY compared to 3G systems and its ability to
instantly reach a broad spectrum of new customers without need of new third
party applications even more appealing to spectrum license holders."
Highlights of the first quarter:
- As previously announced and discussed with Q4 2000 results, COM DEV
Wireless concluded a US$100 million order to provide UMTS 3G cellular
subsystems for installation in Europe, and COM DEV Space announced a
$31 million order covering 14 satellites.
- COM DEV Wireless concluded a supplier agreement with Electronics
Manufacturing Group (EMG) of Calgary for outsourcing its surface
mounted circuit board production, a move that will both reduce costs
and increase product reliability.
- COM DEV Wireless received a commitment for $1.1 million in financial
support in the form of a forgivable loan from the Province of New
Brunswick to help defray the cost of training 200 new employees to be
added as the 3G market grows.
- Pat Mathis, a respected Washington-based expert in assessing global
strategic communications trends, joined COM DEV's board of Directors.
In addition, since the first quarter closed:
- COM DEV was added to the S&P/TSE Information Technology Index.
- The Company concluded a strategic partnership with California-based
Alpine PCS. Alpine PCS will work with COM DEV to conduct M/ERGY
trials and has the option of becoming one of the first M/ERGY
customers in the USA.
- COM DEV concluded an agreement with Canada's Export Development
Corporation and the Afrexim Bank in Cairo under which the banks will
provide US $15 million in financing to a new customer in Lagos,
Nigeria to support the customer's purchase of COM DEV Wireless
products. Further information will be announced as soon as all the
contract details have been concluded. |
