Calypso: Ugh press on Bloomberg today.
Best wishes
Tom D.
(Bloomberg) -- Certicom Corp., which has fired half its employees since
June, is paying $53,569 a month to lease an empty California office building
that was the company's headquarters until last month. The 43,000-square-foot
structure, 26 miles southeast of San
Francisco, hasn't been occupied since the maker of security software
relocated in August to an adjacent site that it occupies with 2 other
companies. The lease on the unused building expires in July 2007.
Certicom can hardly afford the extra expense. The Hayward,California,
company had a loss of $32.6 million in its latest quarter as revenue dropped
50 percent. Certicom forecasts that its cash and cash equivalents will drop
to about $20 million at the end of October from $35.1 million in July.
``Clearly they're committed to these properties,'' said Josef Vejvoda, a TD
analyst , who rates Certicom shares ``hold.'' ``That's something investors
are looking at carefully.'' Certicom established California as its base last
year, saying the Toronto area was far from most of its Silicon Valley-area
customers.Since that time, the company's market value has fallen to C$80
million($50.9 million) from about C$1.5 billion.
Silicon Valley Glut
Certicom may have trouble finding tenants. Vacancy rates in SiliconValley
are at their highest in two years, according to a July report by CPS
Commercial Property Services Inc. Technology companies are paring expenses
or going out of business, creating a glut of space.
``You've got a lot of companies who purchased space earlier this year that
are just trying to unload it right now,'' said Robert Serna, a market
researcher at Santa Clara, California-based CPS. ``It's definitely taking a
lot longer to (sublease) office space.''
Certicom, whose software lets people purchase items, trade stocks and make
transactions privately over wireless devices, signed the lease for the
Hayward building in October 1998, according to a copy of
the lease filed in July with the U.S. Securities and ExchangeCommission.
Rent under the seven-year agreement is scheduled to increase to $57,000
monthly in March.The California location is just part of the excess real
estate Certicom is paying for but isn't using. The company, which spends a
total of $3.1 million a year for office space in Canada and the U.S., is
seeking tenants for 40,000 square feet of space in Mississauga,
Ontario, where it has a 10-year lease for 130,000 square feet. It also wants
to sublease another 30,000 square feet that it plans to vacate at a nearby
site.
``We may not be able to find suitable sub-tenants to occupy this space in a
timely manner in the future, if at all, or otherwise sublease these
properties profitably,'' Certicom said in a July filing with the SEC.
Company spokeswoman Lorraine Kaufman declined to elaborate. She said the
company will address the matter in a future conference call. ``We want to
sublease any extra office space we have -- we're not just going to sit on
empty space,'' Kaufman said. Certicom's Hayward landlord, The
Multi-Employer Trust of Washington, D.C., declined to comment. |
