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Technology Stocks : CrossKeys Systems Corp [CKEY and CKY/TSE] -- Ignore unavailable to you. Want to Upgrade?

To: Francois Lavoie who wrote (620)	12/16/1999 7:26:00 AM
From: Glenn McDougall	Read Replies (1) \| Respond to of 792

CrossKeys buoyant despite losses Kanata software firm focuses on success of product sales Karyn Standen The Ottawa Citizen Despite posting its third consecutive quarterly loss, CrossKeys Systems Corp. said yesterday it has "turned the corner" on its road to recovery. The Kanata telecommunications software developer recorded a net loss of $1.5 million in its fiscal 2000 second quarter, or eight cents a share fully diluted. That compares to a profit of $2.1 million, or 11 cents a share, on sales of $13 million in the year-earlier period. Even so, sales for the quarter just ended were up 46 per cent to $11 million compared to the previous quarter, a strong signal that the strategy to rebuild the struggling company is paying off, said president and chief executive Ian McLaren. "This is the second quarter of greater than 45-per-cent growth for CrossKeys, which underscores the excitement and momentum we all feel building in our company." Mr. McLaren also said that yesterday's numbers beat analysts expectations of a loss of 17 cents a share for the quarter ended Nov. 28. CrossKeys' stock closed up 30 cents yesterday to $9.55 on the Toronto Stock Exchange. Financial results were released after the close of markets. The company said its attempt to transform itself into a company that generates revenue primarily through product sales instead of projects is proving successful. Sales based on products amounted to $10.1 million in the second quarter, representing 92 per cent of total quarterly revenue. "We had our biggest product revenue in corporate history," Mr. McLaren said. Geographically, sales to North and South America represented 70 per cent of sales in the past quarter, up from 34 per cent in the same period last year. Europe, the Middle East and Africa accounted for 24 per cent of sales, while six per cent of sales came from the Asia Pacific region. Noting that the U.S. is a key market for CrossKeys, Mr. McLaren said the company has opened a sales office in Vienna, Virginia, and boosted its U.S. sales team to 11 members from just one. CrossKeys also hired a new vice-president of sales, Frank Pfeilmeier, and said continued growth will be spurred by directing product development toward Internet applications and competitive local exchange carriers in the U.S. CrossKeys lined up 12 new customers in the quarter, its highest quarterly increase in two years, bringing its total customer base to 63. Second quarter revenue from core products jumped 70 per cent over the previous quarter. CrossKeys also reduced its dependence on parent company Newbridge Networks Corp. as a sales channel. The percentage of overall sales through Newbridge dropped to 55 per cent from 70 per cent in the first quarter. Analysts in the past have criticized CrossKeys for its significant dependence on Newbridge, saying the nature of the communications industry, comprising numerous vendors, means CrossKeys must expand the number of its partners. To that end, CrossKeys has lined up seven new sales channels to date, and is "on track" to have 10 active, revenue-generating channels in place by the end of fiscal 2000, Mr. McLaren said yesterday. As for any impact on CrossKeys from speculation that Newbridge may be acquired, Mr. McLaren said: "We're watching this (but) we look at that (an acquisition of Newbridge) as being positive, especially if the acquirer is a key telecom equipment manufacturer." Steve Spooner, chief financial officer, added the speculation surrounding Newbridge has had "no impact on our business at all." CrossKeys had total assets of $75.5 million at the end of the second quarter, of which $48.7 million was cash.