TORONTO (Dow Jones)--Com Dev International Ltd. (T.CDV) is looking at a year
of "very hard slogging" before its outlook improves materially, Duncan
Stewart, partner at Tera Capital Corp., told Dow Jones. Stewart made the
comments following a Com Dev conference call earlier Tuesday. During the
call, Com Dev said it didn't really expect to see much improvement in
earnings over the next four quarters, Stewart said. As reported, Com Dev's
second-quarter earnings were well below expectations. The company's stock
closed down 5.35 at 10.95 Monday, after shedding 6.95 Friday, when the
preliminary quarterly results were released. Stewart said the company may
have to record a C$1 million inventory writedown, as its inventory level was
up significantly in the second quarter. On the wireless side, where the
company plans to consolidate certain operations, Stewart said going forward
Com Dev will have to compete on the basis of price, as there won't be a lot
of technological differentiation between competitors' products. That
competion will probably force prices lower, so Com Dev is looking at "a 20%
price cut on half their business," Stewart said. On the space side of Com
Dev's business, the company said the contract it expected from the Teledesic
satellite project would be delayed. Stewart added that Com Dev no longer has
a "lock" on that contract because of the entry of Motorola Inc. (MOT) into
the Teledesic project. Motorola has a partner which is also in the running
for that business, Stewart said. Stewart said Com Dev capitalized its
research and development expense of C$6.99 million for the first time this
quarter.
Dan old news but likely why
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