News from The Globe and Mail

MKS reports flat sales in quarter
Showwei Chu 02:20 EDT Tuesday, September 11, 2001

Mortice Kern Systems Inc. said its first-quarter sales remained flat as customers continued to delay information technology spending in a sluggish North American economy.

Sales in the first quarter ended July 31 rose 2 per cent to $6.6-million (U.S.) from $6.5-million in the same period a year ago. On a sequential basis, revenue fell slightly from $6.7-million in the fourth quarter.

But Waterloo, Ont.-based MKS said losses in the first quarter narrowed to $1.4-million or 4 cents a share from a loss of $12.5-million or 72 cents a share in the same period a year ago.

The company was expected to post losses of $2-million or 6 cents a share on sales of $6.5-million, according to David Kramer, an analyst at Octagon Capital Corp. in Vancouver.

Although the results were released after the markets closed, MKS's stock finished the day down 1 cent (Canadian) at $1.50 on the Toronto Stock Exchange.

Commenting on the results, MKS chief executive officer Philip Deck said, "We certainly could have done better. But I think in this economy, people are taking longer to do purchase orders."

Mr. Deck said he was "happy with the quarter," emphasizing that the company won some deals from its competitors and gained some market share.

MKS reiterated yesterday that it expects to report sales of between $30-million (U.S.) and $35-million in fiscal 2002. The company hasn't provided per-share earnings targets, but it maintained that it should report positive earnings before interest, tax, depreciation and amortization (EBITDA) in the third quarter.

In the latest quarter, MKS reported negative EBITDA of $1-million compared with negative EBITDA of $4.2-million in the fourth quarter.

MKS recently restructured its two businesses for a turnaround and is counting on its software configuration management business, which helps software developers manage and track changes to their source code, to turn in results.

The company launched its latest SCM products in July and new customers include Boeing Satellite Systems Inc. and Flarion Technologies Inc. As part of its next phase, MKS is now restructuring its interoperability line of business, and recently trimmed 12 positions there. That part of the business is mainly the MKS Toolkit product, which allows users to use Unix commands on a Windows machine.