Tom Sweeney

It's a coming of age tale….

Posts Tagged ‘Europe’

Bridgewater bumps up revenue 41 per cent in Q2

Posted by sweens on July 29, 2010

Bridgewater Systems posted a 41-per-cent increase in second-quarter revenues Thursday, but one analyst cautions a pull-back by the company’s largest customer could create anxiety among investors.

The Ottawa-based software development firm reported revenues of $22.7 million, powered in large part by product sales, which increased 47 per cent to $17.1 million.

Earnings before income taxes were $4.8 million in the same period, an increase from the $4.1 million posted the year before.

The firm’s $47.2 million in revenues in the year to date is also 56 per cent higher than revenues in the first six months of fiscal 2009.

A conference call with analysts Thursday morning discussed the company’s wins in attracting new customers, particularly overseas, and the expansion of partnerships with existing customers such as Cisco and Verizon.

However, mitigating the rosy outlook and continued customer growth was analyst concern about Verizon’s shift away from purchasing Bridgewater software and hardware solutions as a bundle and instead focusing on just the software solutions instead, said Bank of Montreal analyst Thanos Moschopoulos.

“I don’t think it will impact Bridgewater all that much, but when your largest customer is looking to tweak the way business is doing with you it makes people nervous,” he said.

He added he doesn’t see much of an impact given “Verizon has very rapid traffic work on 3G network” and that mobile Internet demand is not expected to slow down any time soon.

The challenge for Bridgewater, he added, was to position itself for the LTE market in the coming years, but that will not begin to take a large share on the market for about 24 to 36 months, he said.

The company highlighted its growth in developing countries during the conference call.

“We have a focus on global expansion and emerging markets,” said Ed Ogonek, chief executive of Bridgewater, talking particularly about their work in India as the country begins its move from 3G to 4G spectrum options.

“We’ve built a technical servies and professional services capability to put some additional in-country and in-region capability,” he added.

“One of the fascinating things around the market is it’s rich with skillset and technical experience.”

The addition of 17 new customers, including 11 outside of North America, drew praise from analysts, although they also drew concern that the new partner business represented only seven per cent of revenues and it is not expected to increase substantially in the next few quarters.

Research notes from Kris Thompson, of NBF financial, said the new customers “should aid future revenue growth and customer diversification.”

He noted that management had continued to keep up its revenue guidance of $85 million to $94 million.

“We continue to expect new customer wins in Q2 2010 to help the company beat this range,” he stated.

Bridgewater further noted two existing customers represent 59 per cent of the firm’s revenue. Chief financial officer Kim Butler said “one can assume” Verizon was one those partners but could not separate the two into more exact numbers.

For future guidance, Mr. Ogonek said the company has been involved in Europe and other regions in implementing a system that can help consumers avoid “bill shock” by sending mobile alerts when the person is getting close to the limit of their browsing downloads.

With more carriers looking to implement these systems in the next year or two, Mr. Ogonek said the company is well-positioned for growth in the coming 24 months.

In the second quarter, gross margin was $15 million, or 66 per cent of revenue, compared with $12.1 million, or 75 per cent of revenue in Q2 2009.

Bridgewater stated this is due to a bump-up in direct-product costs due to bundling integrated systems together, as well as increasing the infrastructure of operations support.

Net earnings before income tax went up 17 per cent to $4.8 million, compared with $4.1 million in the second quarter of 2009.

After income tax, net earnings were $3.2 million, or $0.13 per fully diluted share, compared with $4.1 million ($0.17 per share) in Q2 2009. The decrease was due to a one-time income tax spending of $0.6 million and a non-cash future income tax expenditure of $0.9 million.

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UPDATE: Nortel opts out of auction for carrier business, works on $182M direct sale to GENBAND

Posted by sweens on March 2, 2010

Published on February 24th, 2010
Krystle Chow
Ottawa Business Journal

Nortel Networks Corp. has decided not to auction off its carrier voice-over-Internet protocol and application solutions business and is instead selling the division directly to Texas-based GENBAND Inc. for US$182 million, with more than three-quarters of the division’s staff expected to keep their jobs.

The former telecom giant, which is currently working through bankruptcy proceedings, said Wednesday that it’s working toward a second-quarter closing for the sale of the telecom carrier technology business’s assets, which include its softswitching, gateways, session initiation protocol – or SIP – applications and time-division multiplexing products and services.

 “Uniting our two businesses will create one of the industry’s strongest carrier VoIP players, in terms of market share, customer base and portfolio,” said Samih Elhage, president of the carrier business, in a statement. “Joining forces with GENBAND will allow us to continue to provide a highly reliable solution and service offering to service providers and enterprises across the globe.”

 Mr. Elhage added that “a significant majority” of the division’s employees would be offered jobs at GENBAND. The company noted that group will include certain employees in some jurisdictions in the Europe, Middle East and Africa region that will transfer automatically to GENBAND by operation of law.

 A company spokesperson noted in an e-mail that about 1,638 of the division’s staff, or 78 per cent, will have the opportunity to continue working with GENBAND, although the latter won’t be able to extend offers until it’s received court approval for the deal.

 The business employs approximately 2,100 people in total, with 80 per cent of that number located in North America. Thirty per cent of the North American staff are in Canada, the company said in an earlier interview with OBJ.

 GENBAND, which has teamed up with private equity firm One Equity Partners and other existing shareholders to secure the carrier division’s assets, had initially offered US$282 million. However, Nortel has agreed to make balance sheet and other adjustments to reduce the purchase price by US$100 million.

 Nortel first announced in December that GENBAND had put in a bid that was supposed to kick off a competitive bidding process, culminating in an auction that would have started on Thursday.

 At the time, Mr. Elhage told OBJ that the sale would represent one of the final steps in its insolvency proceedings.

 The Toronto-based company had sold off a number of its businesses through the auction process, including its wireless division, enterprise unit and optical business.

However, company spokesperson Jamie Moody said Nortel chose not to go with the auction route for the carrier business as it didn’t receive any other qualified bids, despite interest from other parties.

 When asked if Mr. Elhage would continue on at GENBAND following the completion of the deal, Ms. Moody reiterated the fact that GENBAND isn’t allowed to enter into discussions or extend offers to any employees until the transaction is finalized.

 The sale will now await U.S. and Canadian court approvals at a joint hearing on March 3.

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