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SR Telecom Announces Third
Quarter Results - Actively pursuing sale of the Company
Other topics:
WiMAX Service Rollout,
WiMAX Lebanon Network
SR Telecom Inc
November 8, 2007
Montreal, Quebec -- SR Telecom Inc. (TSX:SRX), a leading vendor of
broadband wireless access solutions through its WiMAX Forum-certified
symmetryMX product line, today announced its third quarter results for
the period ending September 30, 2007. All dollar figures are in Canadian
funds unless otherwise indicated. |
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SR Telecom reported
improved revenues and decreased losses in its third quarter compared to
the same period in 2006; however, these results remained below
management's expectations. Third quarter revenues were adversely
affected by a longer-than-anticipated sales cycle with several large
potential customers. The Company nonetheless remains encouraged by the
continuing interest in its symmetryMX suite of WiMAX solutions from
customers around the world.
The Company also announced that, further to the strategic review
initiated on May 10, 2007, its Board of Directors has evaluated the
Company's strategic options in the context of SR Telecom's past and
present financial situation, its order backlog, and the likelihood of
future success with its existing structure. The Board has concluded that
it is in the Company's best interests to actively pursue the sale of the
Company and/or its assets. SR Telecom has engaged investment bankers
Lazard Ltd. to assist the Company in identifying interested parties. The
Board has appointed a special committee in connection with this process,
which will continue to evaluate the Company's strategic options.
"To grow and succeed in the global WiMAX market, SR Telecom needs a
strong financial footing, a diversified product portfolio and the
purchasing power to benefit from economies of scale," said Paul
Griswold, Chairman of the Board of SR Telecom.
Added President and CEO Serge Fortin, "While SR Telecom has taken
positive strides in 2007, its past financial performance and current
market perceptions weigh heavily on operations, and the Company needs to
consider alternatives to strengthen itself other than solely through
additional financing options."
Consolidated third quarter results
SR Telecom's third quarter revenue grew 10% to $18.0 million from $16.4
million during the same period in 2006. Revenue in the third quarter of
2007 was below management's expectations and was generated mainly
through the ongoing implementation of major legacy contracts in Mexico
and Argentina. Operating loss from continuing operations was $19.6
million, a significant decrease from the $41.5 million operating loss
recorded during the same period one year ago. Net loss and comprehensive
loss was $22.2 million compared to $53.5 million in 2006.
A large portion of these improvements are due to the $21.6 million in
restructuring charges that were incurred in 2006. Nonetheless, the 2007
third quarter showed a $6.3 million decline in selling, general and
administrative (SG&A) expenses. The SG&A gains, however, were offset by
a $7.0 million shift from gross profit to gross loss, due primarily to a
$3.6 million write down of inventory, and to the Company's symmetryONE
product experiencing significant price pressure in the market.
Year-to-date revenue was $63.2 million, up 25.0% from $50.4 million in
the first nine months of 2006. Operating loss for the nine-month period
in 2007 was $42.1 million compared to $70.7 million in the same period
of 2006. The year-to-date net loss and comprehensive loss was $49.3
million compared to $84.4 million during the first nine months in the
prior year.
Backlog at September 30, 2007 stood at $19.3 million, the majority of
which is expected to be delivered by the end of this year. This compares
with $45.4 million at the end of 2006 and $27.1 million at the end of
the second quarter of 2007.
Financial position
As announced on July 3, 2007, the Company entered into an agreement with
a syndicate of lenders comprised of shareholders providing for a term
loan of $35.0 million, all of which was drawn at closing. An additional
$10 million term loan could be available for drawdown, subject to
certain conditions being met, for a period of up to one year from
closing. As at September 30, 2007, management believes the Company had
not met all of the conditions required to drawdown the additional $10
million.
As at September 30, 2007, the Company's consolidated cash, including
restricted cash, was $27.1 million, up slightly from $26.2 million at
December 31, 2006.
About SR Telecom
SR Telecom (TSX:SRX) is a recognized global leader in delivering
innovative broadband wireless access (BWA) solutions that enable service
providers to efficiently deploy quality voice, Internet and
next-generation services in urban, suburban and remote areas. A
technological pioneer with more than 25 years of experience in wireless
networking, SR Telecom is the only BWA vendor with extensive real-world
expertise in deploying the advanced features of the WiMAX standard. It
actively promotes standards-based BWA networking through its role as a
principal member of the WiMAX Forum.
With its primary offices in Montreal and Mexico City, SR Telecom is an
agile, customer-focused organization with a proven track record. SR
Telecom's products are currently deployed in more than 110 countries
worldwide. For more information, visit www.srtelecom.com. |
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