5/30/2003 - Vertel Corporation (OTCBB:VRTL), a leading provider of convergent network mediation and management solutions, reported revenues of $911,000 for the first quarter ended March 31, 2003, a 54% decrease from the $2 million reported for the same period in 2002. Compared to the previous quarter, revenues in the first quarter were also down 54%, from $2.0 million. The net loss for the quarter was $1.9 million, or $0.06 per share, an improvement over the $2.4 million loss, or $0.07 per share, experienced during the same period a year ago.
Gross profits as a percentage of sales declined to 60% for the first quarter of 2003, compared to 86% for the previous quarter and 46% for the same period a year ago. "Clearly, we are disappointed with our first quarter results," said Marc Maassen, President and CEO of Vertel. "We experienced a continuing weak economy in the U.S. and unexpected project delays with several of our large clients."
In addition, Maassen said the Company's sales cycle is typically lengthy, which can result in significant fluctuations from one quarter to the next and even between geographic markets. "We also are now focusing more on the carrier market with our M*Ware(TM) software mediation and management solutions, which has resulted in a short-term lag in sales, especially in the U.S.," he said.
Maassen said general and administrative costs for the first quarter decreased 17%, to $660,000, from $791,000 a year ago. As a percent of revenues, general and administrative expenses were 72% and 40% in the first quarter of 2003 and 2002, respectively.
The Company expects general and administrative expenses will continue to decrease in 2003, reflecting a number of additional cost savings initiatives.
Maassen said sales and marketing expenses fell 30% in the first quarter of 2003 to $896,000, from $1,273,000, compared to the same period a year earlier. The decrease of $377,000 reflected lower expenses for commissions, travel, rent and payroll. Nevertheless, the decline in expenses did not keep pace with the revenue shortfall and sales and marketing expenses as a percentage of revenues increased in the first quarter of 2003 to 98%, from 64% in 2002. "The Company expects sales and marketing costs to be slightly lower for the balance of the year and should improve as a percent of sales as revenues increase," Maassen added.
In 2002, the Company consolidated all business units and product lines around M*Ware(TM), or Mediation Ware, the company's trademarked software mediation and management solutions. M*Ware enables the integration of existing networks and applications, as well as the development of new network and service management applications.
"Our key strategies for 2003 continue to include providing innovative solutions to Vertel's long-term global customers, continuing penetration into major service providers and partnering with other solution providers and integrators," Maassen said.
"During the first quarter, the Company had a negative cash flow from operations of $956,000 and at the end of the quarter had negative working capital of $2.5 million and an accumulated deficit of $99.5 million," said T. James Ranney, Interim Chief Financial Officer. "Cash and cash equivalents totaled $472,000 on March 31, 2003, a decline of $409,000 from the balance of $881,000 on December 31, 2002. The decrease in cash reflected the use of cash in operations being partially offset by net cash proceeds of $500,000 from the issuance of non-convertible promissory notes to an institutional investor. The Company did not record any goodwill impairment for the quarter.
"In addition, since the beginning of the year, we have reduced the total number of employees from 61 to 44 and have implemented a number of expense saving initiatives. We will continue to look for additional cost reduction opportunities as the year progresses," Ranney said.
Vertel is a leading provider of convergent network and mediation management solutions. Vertel's high-performance solutions enable customers to quickly and cost-effectively introduce new services, networks and OSSs while leveraging existing investments. Using the M*Ware(TM)-driven Development Environment, Vertel has created a suite of mediation-based applications that address protocol translation, data transformation, element and network management, OSS application integration, and OSS exchange services.
Vertel's product offerings allow seamless management in multi-technology and multi-vendor environments. Vertel also develops communications software solutions that fit individual customer requirements through its Professional Services organization.
For more information on Vertel or its products, contact Vertel at 21300 Victory Boulevard, Suite 700, Woodland Hills, California 91367; telephone: 818/227-1400; fax: 818/598-0047 or visit www.vertel.com.
Vertel and M*Ware(TM) are trademarks of Vertel Corporation.
Previous Page | News by Category | News Search
If you found this page useful, bookmark and share it on: