From Ottawa Citizen
Plaintree fights for life
Bert Jill
The Ottawa Citizen
Plaintree Systems Inc. of Stittsville is on the ropes and fighting for its life.
The networking company said yesterday it could be forced out of business in the
next month if it fails in the search for new capital to repair an injured balance sheet.
The tale of corporate woes includes another quarter of heavy losses, a failure to
find new markets for a key product and the prospect of losing its listing on the
Nasdaq stock exchange.
"If the company is not successful in obtaining funding within approximately the next
30 days, continuation of the existing business may not be viable," the Plaintree
statement said.
The star-crossed company, which makes high-end telephone switches, has
disappointed investors and employees for much of its 11-year history. It has 150
employees, including 132 in the Stittsville area.
It won a fresh chance for survival last June when Nortel stepped in with a
$9-million investment and the appointment of Colin Beaumont, a retired top
Nortel engineer with 30 years' experience, as chief executive.
But despite new products aimed at the Internet connection market announced in
December, Plaintree continued to hemorrhage money. A big reason was a failure
to penetrate the wide area network market with its major product, the
WaveSwitch 9200.
With $3 million left in the bank and monthly expenses of about $2 million,
Plaintree doesn't have a lot of room to move.
"We really do have to make a deal (because) the time getting preciously close,"
Mr. Beaumont said.
Still, he is talking to three potential partners and thinks it is realistic that a deal can
be done.
Nortel is not one of the potential investors because it bought Bay Networks which
makes similar and many other networkinig products last summer.
"If I didn't think we could make it happen, we would be taking a very different
approach and trying to sell off some pretty exciting technology in bits and pieces,"
Mr. Beaumont said.
Plaintree announced losses of $5 million, or 30 cents a share, in the quarter ended
Dec. 31 compared with a loss of $5.6 million, or 31 cents a share, in the
year-earlier period.
Revenues for the quarter of $4 million were 10 per cent higher than a year ago.
Plaintree said Nasdaq could delist the company stock as early as Jan.25 because
the current price fails to meet exchange requirements. Ironically, Plaintree stock
has risen sharply in the past five days to reach $1.20 after touching a low of 70
cents at the end of December.
Its 52-week high of $4.95 per share was set in March. |
